Inflation is knocking on the door. UK's leading banks plunge nearly
1.4 percent. The recent headlines are not optimistic, to say the
least. Northern Rock improves rates and services for the savings
products it currently offers. Should this be seen as the beginning of
a shift in banks' priorities in the ugly face of inflation? It could
be argued that that is the case. "Prices are going up ... we've had a
decade long run of deflation where far eastern consumer goods have
brought down inflationary forces. That appears to be going into
reverse which is certainly going to cut the scope for any quick
interest rate cuts," warns David Scott, a senior stockbroker at
Redmayne-Bentley.
Following a late sell off in the foreign markets, the FTSE 100 of
Britain's blue-chip shares fell 0.4 percent by midday last Friday,
hampering the relief that the Bank of England tried to provide by freezing
the rates at 5.25 only a week ago, and confirming the fears that UK
rates are likely to increase in the not-distant future.
Although affected as much as the other banks by this trend, Northern
Rock is ahead of the game. As far as savings accounts are concerned,
that is. Where others see trouble, Northern Rock sees opportunity.
Whatever might be the case, the increase of Northern Rock's Silver
Savings Account rate amidst the whispers of the looming inflation is
fortunate.
The Silver Savings Online Account will now pay an annual interest rate
of 5.71% gross per annum variable for all balances over ?1. Northern
Rock is keen on promising stability, and pledges that the Annual
Equivalent Rate on the accounts will be at least the same as the UK
Bank Base Rate until 31 January 2010. The bank has also added
depositing facilities to its existing mortgage branches, where it is
now possible to acquire ISA products, fixed rate bonds, and Sliver and
Silver 30 accounts. In the spirit of the times, these branches are
"cashless". Northern Rock Operational Director Aidan Heslop is
pleased to report that such branches have become increasingly popular.
How can they not be? According to Aidan Heslop; "We have found that
such centers continue to prove extremely popular with customers
looking for a new loan, who can simply walk in off the street when it
suits them." It is a relief to know that presently, strolling down the
street on a fine spring day, one might drop in at any time to open a
savings account, and not only to secure a loan.
As the European Central Bank is keeping the interest rates on hold, so
as to have more time to examine the threat of inflation, the arrival of the
saving accounts to the cradle of debt, comes not a moment too soon.