The Bank of England’s (BoE) decision to maintain the base rate of 4.25 per cent is expected to bring “welcome stability” to those planning for retirement, supporting annuity rates and competitive savings products.

Standard Life managing director for retail direct, Dean Butler, said that for savers, the current pause could provide a “short window of stability” and keep best buy retail cash rates higher for longer.

“However, with inflation above target, real returns on cash savings risk being eroded and it remains important to consider a diversified approach,” he added.

“For longer-term goals, investing can offer the dual advantages of potential inflation-beating growth and, for products like individual savings accounts and pensions, tax efficiency.

“While investing carries risk, a long-term perspective can help build greater financial resilience over time.”

My Pension Expert policy director, Lily Megson, suggested that with inflation still lingering and household budgets under pressure, it’s a “smart time” for savers to reassess their pension strategy and take action if it doesn’t align with long-term goals.

She also stressed the importance of financial advice, indicating that making the most of today’s conditions can provide savers with the clarity and confidence to navigate change and stay on track for their desired retirement.

LCP said the Monetary Policy Committee’s (MPC) decision was “broadly expected by markets”, with six voting to hold rates whilst three opted for a 0.25 per cent cut.

St. James’s Place group advice director, Alexandra Loydon, said that although the “news is no shock”, it doesn’t make it any “less concerning” for consumers who continue to face rising financial pressures.

She suggested that this is once again an indication that the path to lower rates will be “by no means straightforward”.

Meanwhile, LCP investment team partner, Chris Helyar, said the decision to hold the base rate reflects the MPC’s “cautious stance” amidst lingering inflationary pressures and persistent political uncertainty.

Helyar added that it also underscored a “wait-and-see narrative” in what is a very uncertain economic and geopolitical environment.

AJ Bell head of investment analysis, Laith Khalaf, echoed this, stating: “The market is still expecting two rate cuts by the end of this year, but given the swirling vortex of uncertainty currently engulfing world affairs, it’s best not to count your chickens until they’re hatched.”

Khalaf also warned that after a “sugar rush” of high cash rates, savers might now be looking at their returns with some measure of disappointment.

He said it also "remains to be seen" whether lower rates will tempt savers to move out of cash and into riskier assets in search of better long-term returns.

Loydon added that while the picture may seem slightly better for savers, promising higher rates for longer, the continued “stubbornness” of inflation means it’s “more important than ever” for consumers to “stay alert and ensure that they are taking advantage of the most competitive savings rates available”.

She said that for those saving for the long term, investing can be a “smart” way to boost income further, provided they take a well-diversified approach.

“Building a financial plan is a wise decision for those looking to maximise returns, allowing individuals to position themselves in the best way possible amid ever-changing economic circumstances,” she added.

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