In line with market predictions, the Bank of England’s Monetary Policy Committee has decided to cut the base rate to 4% at its meeting on 7 August 2025.

This means that savings accounts with variable interest rates are highly likely to lower in line with the 0.25% reduction.

Savers may be disappointed with the news, especially if any fixed-term deposits are about to mature. In August 2024, fixed-term deposits were as high as 4.95% AER; now, most  fixed-term deposits are likely to be below 4.00% AER.

While it’s difficult to predict whether there will be another 1% fall to interest rates by August 2026, with some experts predicting the base rate will be slashed to 2.75% by the end of 2026, it’s clear that hesitation can lead to lower interest returns.¹

According to our research, Individuals and SMEs will now look to fixed-term deposits, with individuals favouring 1-year terms, and businesses preferring 6-month terms.

Charities, meanwhile, should be motivated by the base rate cut to ensure their cash reserves are getting decent interest returns for them, especially in a year which has been deemed ‘the big squeeze’.²

Savings accounts keep your money above inflation

Money left in current accounts doesn’t just give you little or no interest returns; its value is eroded by inflation.

If your cash is in a savings account with an interest rate higher than inflation (currently 3.6%), it will increase your spending power.

The base rate is cut by the Bank of England in an attempt to lower inflation to its 2% target, set by the Government. This summer’s spike in inflation was predicted by economists, and forecasts are for a steady fall of inflation throughout the rest of the year, though it’s important to make sure your cash is earning high interest rates while they are still available.

A further base rate cut is predicted in December 2025, and many experts think the base rate will be as low as 2.75% by the end of 2026.

No minimum deposit with Akoni

Alongside Individual and Business accounts, Akoni welcomes applications from Charities, Trusts, Power of Attorneys, Court of Protection, Sole Traders, SIPP and SSAS.

There’s no minimum deposit to use Akoni, and we have a wide range of Instant Access, Notice Accounts, and Fixed-term deposits for all our clients.

We aim to have your application processed within three business days once we have all your supporting documents. After this application, you won’t need to complete any further applications to open savings accounts with our 20+ UK-regulated and authorised banking partners.

If you’d like more information about Akoni, or would like a no-obligation deposit illustration produced by one of our team, please email contact@akonihub.com or call 020 3137 9388.

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Sources:

1) Bank of England's long unwinding road | Reuters

2) 2025: The year of the 'big squeeze' - The Road Ahead 2025 | News index | NCVO