Impact of Iran war expected to bring hold in interest rates

Wider borrowing cost are also likely to be affected, such as the rates on credit cards and personal loans.

“This will be particularly challenging for lower income households, many of whom were hoping that falling rates would ease pressure on already stretched budgets,” said Tamsin Powell, consumer finance commentator at Creditspring.

“Instead, they are now facing a prolonged period where the cost of credit remains high, while essentials like food, utilities and transport continue to take up a greater share of income. This leaves far less flexibility to absorb financial shocks or unexpected expenses.”

A fall in interest rates is usually bad news for the returns paid to savers. A hold should offer “some short respite”, according to Rachel Springall, of Moneyfacts.

“Over the past couple of weeks, there have been more savings rate increases than reductions, most notably on one-year fixed rates, but the true benefit rests in the margins, so average rates are not moving much,” she said.

“The market needs stability and savers need to feel encouraged to build a nest egg.”

About two-thirds (60%) of UK savings accounts fail to beat the Bank rate of 3.75%, she said.