This is the fourth increase since December and comes amid the rising cost of living, and soaring inflation.
However savers have been warned they “won’t see any benefits” as inflation is currently locked in at seven percent, and is only predicted to keep increasing.
Kevin Brown, savings specialist at Scottish Friendly, said: “For those who are saving, cash is still a terrible place to be with locked in real losses, even if savings account rates are ticking up in step with the BoE.’
“Celebrating savings interest rates going up to one percent while the real value of your cash is being decayed by eight percent inflation is like being sold a car with no wheels and then getting charged for not driving it out of the forecourt – it’s just an insult to savers and hard working families.”
Victor Trokoudes, chief executive and co-founder of saving and investing app Plum, explained what it means for households alongside the rising cost of living.
He said another rate hike was “no surprise at this point”, but warned: “Savers won’t see any benefits against high inflation and need to be planning to protect and grow their savings.
“Spiralling inflation, rising living costs, a huge jump in the energy price cap and Russia’s invasion of Ukraine have all put pressure on household savings. As costs rise, budgets for the average person will be stretched ever thinner and this is likely to be the case for a long time.
“Interest rates may eventually dampen inflation, but the average person needs to make sure they are still building their savings pots and that what they do have is protected against the impact of cash devaluing.”
He suggested how Britons can make the most out of their money despite it being eroded by inflation.
Mr Trokoudes continued: “Budgeting sensibly to make sure money is being put into savings regularly is incredibly important but the best way to make the most of this cash is to start investing.
“Savings that people are comfortable they won’t need in the near future should be put into investments, either through a fund of companies or buying shares in those individual companies.
“This is the best way to tackle the eroding value of that cash caused by inflation, and will handle rising costs of utilities and everyday expenses. Keeping it locked away in a bank will only cause it to lose value over time, which many simple cannot afford right now.”
With predictions of double-digit inflation looming, Britons are warned to brace themselves for a further cost of living squeeze.
Mr Brown continued: “Despite market volatility, long term savings really are still best placed in a diverse portfolio including the stock market, bonds, property and cash.
“For many households, the ability to contribute to long-term savings is being severely hampered by the cost-of-living crisis.
“But it is still an essential aspect of household budgeting and shouldn’t be cast aside. Even very small monthly contributions can make a big difference in the future.”