Following the Bank of England’s announcement that inflation has now hit 5.2 per cent, Alliance & Leicester has launched a fixed rate bond with an inflation busting interest rate.

According to Moneyfacts.co.uk, a standard rate tax payer needs to find a savings account paying an interest rate of 6.5 per cent or more in order to beat inflation and earn interest – the Alliance & Leicester bond offers a rate of 6.6 per cent.

And, in the light of recent events on the stock market and throughout the UK banking system, savers are being pushed towards safer savings avenues such as bonds.

Commenting on the limited edition account, savings manager at Alliance & Leicester, Martin Leake, said: “This is a limited opportunity to invest anything from £1,000 and £2,000,000, and get a good return, without the risk of being exposed to stock market volatility.”

The news comes as thousands of Brits flock to savings accounts with added safety and guarantees following the fall of the Icelandic banking system. However, many savings providers are being forced to withdraw accounts or increase rates as a result of increased demand.

Nationalised Northern Rock has already withdrawn many of its savings accounts for fear of breaking competition rules and National Savings and Investments (NS&I;) has announced its second savings rate cuts in as many weeks. The Government backed savings provider is cutting rates by as much as 0.5% following the Bank of England’s shock base rate cut last week.

© Fair Investment Company Ltd