Blow for savers as Carney U-turns yet again on rates

SAVERS suffered a fresh setback yesterday as interest rates were frozen following yet another U-turn by Mark Carney.

In a blow to millions of families hoping for better returns on their nest eggs, the Bank of England left rates unchanged at 0.5 per cent.

While this spells further misery for savers, the decision will be welcomed by borrowers anxious about their mortgage costs. But analysts accused Bank chief Mr Carney – dubbed the ‘unreliable boyfriend’ for blowing hot and cold over interest rates – of spreading confusion.

Announcing there would be no change in borrowing costs yesterday, despite earlier signals that there would be, the Governor said rates were likely to go up ‘a couple of times over the next year, year and a half’. The pound fell on speculation that there may be no rate rise until 2019.

But just hours later, Mr Carney gave an interview to the BBC in which he said a rise this year was still very much on the cards.

‘It’s likely over the course of the next year rates will go up, likely by the end of the year,’ he said.

The pound then made up some of its earlier losses.

John McNeil, an expert at investment management group Kames Capital, said trying to follow the Bank’s guidance was like ‘walking behind a shopper whose supermarket trolley wheels are defective’.

Canadian Mr Carney was given the ‘unreliable boyfriend’ label by MP Pat McFadden four years ago.

Ben Brettell, senior economist at investment firm Hargreaves Lansdown, said: ‘Not for the first time, Mark Carney’s policy of guiding the markets as to what to expect has backfired.’

The Bank raised rates for the first time in over a decade last November, lifting them from a record low of 0.25 per cent to 0.5 per cent, affecting millions of families and businesses. In February, the Bank indicated further rises would be needed as inflation hit 3.1 per cent.

The Bank suggested three rate rises over the next three years would be enough to bring inflation back to the 2 per cent target.

Charlotte Nelson, finance expert at Moneyfacts, said that freezing rates ‘has dashed savers’ hopes of a better return’.

The Bank’s nine-strong monetary policy committee, led by Mr Carney, voted seven-two in favour of leaving rates unchanged.

Mr Carney also said the UK would bounce back from its recent economic slowdown – but claimed the outlook ‘remains clouded by Brexit’. He said ‘we expect that the UK economy is going to pick back up’ after growing by just 0.1 per cent in the first three months of the year.

But the Bank still cut its growth forecasts for this year from 1.8 per cent to 1.4 per cent.

‘Dashed hopes of a better return’