History shows small rate rises but in quick succession

With base rates remaining at a historic low for more than two years, Lloyds TSB has looked at past trends for base rates since 1997, as speculation continues when the next increase will come.

Looking at base rate changes over the last fourteen years, reductions in the Bank of England Base Rate have ranged from 0.25% to 1.50%, however, base rates have only ever risen during the same period by 0.25% at any one time. During this period, increases have usually come in quick succession, with several rises over a short space of time.

Between May and August 1997, there were four increases in the Bank of England base rate, whilst rates went up four times in the six months from September 1999 to February 2000. There was a sequence of five base rate rises over the 12 months from August 2006 to July 2007. This was the last time the UK saw an increase in base rates.

Lloyds TSB Economist Nitesh Patel said: "The outlook for base rate remains highly uncertain, however, if economic recovery continues and Bank Rate does rise in a similar fashion to past trends, as financial markets currently expect, savers may want to consider accounts that will automatically take advantage of each rate increase."

Bank Rate remains at a historical low of 0.50%, but with market speculation that rates may begin to rise this year savers will be looking for opportunities to take advantage of any Bank Rate increase. Tracker bonds are an easy way to get the most out of any rate rise to come over the coming months.

Lloyds TSB has recently launched two new Tracker Bond saving accounts currently offering new and existing customers an interest rate of 3.00% over a one year term and 3.30% over a two year term. As the Bank of England base rate increases, so will the interest rate on these accounts.