Is this the end for 4% savings rates - and what should you do with your cash now?

Global tariffs imposed by US President Donald Trump have upended economic markets everywhere and sent investors running for cover.

Investors are now betting that the Bank of England will cut interest rates three or four more times this year as a result.

Just a month ago, markets had expected just one or potentially two more cuts this year of 25 basis points each, which would have taken base rate from its current level of 4.5 per cent to 4.25 or 4 per cent by the end of the year.

This is good news for borrowers who have been bearing the brunt of higher interest rates for more than two years.

The lowest mortgage rates have dropped to below 4 per cent this morning as investors ramped up bets on further interest rates cuts.

By the same token, this is bad news for savers who have been enjoying making the most of higher interest rates to bulk up their savings.

The base rate affects how much interest savers can earn on their money. In general, savings rates rise when the base rate is rising, and fall when it is falling.

There are now fears savings rates, like mortgages, will also fall to below 4 per cent if the Bank of England moves to cut interest rates four times this year.

James Blower, savings expert at The Savings Guru said: 'What this means, for savings rates, is that they are likely to fall further than we initially expected this year.

'While we are not going to see the end of 4 per cent rates immediately, we are likely to see rates fall back – starting in May when we are almost certain the base rate will fall to 4.25 per cent.

'I believe 4 per cent rates will be around for a few more months, but they are definitely in danger.

'A drop to a base rate of 3.5 per cent is likely to see the end of them, with easy-access rates falling in to the low 3 per cent bracket, and one-year fixed rates likely to fall below 4 per cent too.'

Andrew Hagger, director of money website MoneyComms added: 'It is difficult for anyone to predict what will happen with rates over the remainder of 2025, as the US tariff war is currently creating so much volatility and uncertainty.'

Those with cash they won't need to dip into for a long time or two should consider opening a fixed-rate savings account to take advantage of today's higher rates.

On these accounts, the rate stays the same for the fixed period, often between one and five years - but money cannot usually be removed in that time.

> Compare fixed-rate savings accounts using This is Money's best-buy tables

The average one-year fixed savings rate is 4.19 per cent, according to rates scrutineer Moneyfacts Compare, while the average one-year Isa is 4.1 per cent.

Savers can get a one-year deal from Cynergy Bank paying 4.65 per cent. A saver putting £10,000 in this account will earn a guaranteed £465 interest over one year.

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It comes with full protection under the Financial Services Compensation Scheme up to £85,000 per person.

Other top one-year savings accounts are Gatehouse Bank, Oxbury Bank and Birmingham which are paying between 4.63 and 4.65 per cent. All offer FSCS protection.

Fixed-rate accounts with longer terms are also currently paying 4.65 per cent over two, three and five years, all offered by Gatehouse Bank.

Hagger says: 'If you've got some cash that you are happy to lock away for a year or two, the current 4.65 per cent best buy rate from Gatehouse Bank looks attractive and offers a flexible monthly interest option.'

Savers should also strongly consider using a tax-friendly cash Isa to protect the interest they earn from being taxed.

The best fixed-rate Isa rates offer 4.55 per cent over one year, from Cynergy Bank.

It also offers a two-year Isa paying 4.44 per cent and a three-year Isa paying 4.43 per cent.