The government’s saving arm has announced an increase to the interest rates on its easy access Direct Saver and Income Bonds.

They have risen by 15 basis points from 0.35% gross/AER to 0.50% gross/AER.

NS&I chief executive, Ian Ackerley, said: “The new interest rates will ensure that our products are priced in line with the broader savings sector. The increase will also help us to meet our annual Net Financing target for 2021/22 of £6bn, in a range of £3bn to £9bn.”

The move follows on from the Bank of England base rate rise last week from 0.25% to 0.5%.

‘Other banks pressured to follow suit’

Myron Jobson, senior personal finance analyst, interactive investor, said: “The new bumper rates are in line with the Bank of England’s base rate, nothing more. While they are nothing to shout about, it is good form from the Treasury-backed bank as many others have appeared uninterested in raising theirs from ultra-low levels.

“NS&I was widely viewed as the last bastion of competitive savings rates in the UK amid the era of rock bottom interest rates, before slashing its rates sharply in November 2020 to low levels offered by high street banks – losing fans in the process.

“The hope now is that many banks will feel pressured to follow suit. Whether this will come to fruition remains to be seen. The rate offered by NS&I’s Direct Saver account is better than the equivalent offered by high street banks, but below the current easy access best buys.”

Related: See YourMoney.com’s Base rate rise: the savings accounts now paying the most interest for more information.