The last 18 months have been good for savers, as the Bank of England has repeatedly hiked base rates from 0.1 percent in December 2021 to 5.25 percent today. And it looks like there are further increases to come.

The headline inflation figure for July fell to 6.8 percent on Wednesday, but that was still higher than many hoped.

Markets now expected the BoE’s rate-setting monetary policy committee (NPC) to increase base rates in September to 5.5 percent, and carry on hiking until they hit six percent.

While that's a disaster for mortgage borrowers it should be good news for savers. But there's a catch.

Banks and building societies did not increase their market-leading fixed rate savings bonds after the last rate hike, and they probably won’t do so after the next one, either.

Anna Bowes, founder of savings rate tracking service Savings Champion, says this may be as good as it gets for fixed-rate bonds.

“It is more and more apparent that the fixed-rate bond market may have peaked and with the latest inflation figures, it could be that things reverse and top rates start to fall back.” 

While interest rates are set to climb higher this year, banks and building societies expect them to start falling in 2024, and are wary of paying too much today and getting caught out.

SmartSave’s one-year fixed-rate savings bonds top the table paying 6.01 percent but Bowes notes: "Until recently, savers could get 6.06 percent.”

While that is only a small reduction, it does point to the direction of travel.

The highest interest rate it is possible to get on a fixed-rate bond today is from Recognise Bank, which pays 6.1 percent a year for two years.

Alternatively, Recognise pays 6.05 percent a year for three years.

Savers who spot a tempting deal may need to act fast as many market-leading accounts are swamped with demand and quickly withdrawn, Bowes adds. “Secure Trust Bank had also offered a three-year bond paying 6.05 percent earlier this week, but it was only available for a couple of days.”

The five-year bond table is even more disappointing, she says, but adds that there may be an opportunity here for savers who are willing to take a long-term view.

Cynergy Bank has just withdrawn its table-topping 5.81 percent rate. This leaves RCI Bank with the top paying bond at 5.8 percent a year for five years.

Bowes reckons five-year best buy rates are more likely to fall than rise from here, and suggests savers make the most of today's opportunities.

“If inflation does fall close to the BoE’s target of two percent in the near future, by locking in for three or perhaps five years at around six percent today you could end up in the enviable position of earning inflation-beating for some or most of your term.”

READ MORE: Inflation is falling but the pain isn’t over yet – here’s what savers should do

Savers also have to decide whether they want to put their money into a standard fixed rate bond or opt for a tax-free cash Isa instead.

Typically, cash Isas pay slightly lower rates of interest, but it is all free of income tax inside the £20,000 Isa wrapper.

Most savers have shunned cash Isas because the interest from non-Isa accounts has mostly been tax-free thanks to the personal savings allowance (PSA).

Introduced in April 2016, the PSA allows a basic rate taxpayer to earn £1,000 a year in interest before paying income tax, while higher rate taxpayers could earn £500 tax free.

Today's one-year fixed-rate cash Isa, from Charter Savings Bank, pays 5.72 percent. This rises fractionally to 5.73 percent on its two-year fixed-rate cash Isa.

Zopa's five-year fixed rate cash Isa pays 5.26 percent, closely followed by Close Brothers and United Trust Bank who pay 5.25 percent.

While these are lower than fixed-rate savings accounts, they could still prove a good deal for those who are likely to pay income tax on their savings interest.

At some point, these cash Isa rates should beat inflation too, as the Bank of England reckons consumer price growth will drop to five percent by Christmas.

As ever with interest rates, nothing is guaranteed. Expectations change by the day and it's impossible to get your timing completely right. Good luck!