Rates of return
Household sector
Since January 2008, rates of return on deposits held with all monetary financial institutions by the household sector are effective interest rates (For more information on Effective interest rates revisionspractices see further details about revisions). Before January 2008, this only applied to banks, as data for building societies were weighted averages of gross interest rates received by savers, derived from a monthly return of all building societies provided by the Financial Services Authority (FSA). Before January 1999, rates of return on deposits with banks were averages of quoted rates. Quarterly rates are calculated as averages of monthly rates. Interest rates for household sector time deposits exclude rates on tax-exempt special savings accounts (TESSAs) and cash ISAs.
Corporate sector
Since January 2008, rates of return on deposits held with all monetary financial institutions by the corporate sector have been effective interest rates (For more information on Effective interest rates revisionspractices see further details about revisions). Before January 2008, this only applied to banks, while rates of return on deposits by the corporate sector held with building societies are assumed to be similar to the rates on time deposits by the corporate sector held with banks. Before January 1999, rates of return on deposits with banks were averages of quoted rates. Quarterly rates are calculated as averages of monthly rates.
Cash ISA (and TESSA) rates
Since January 2011, rates of return on ISAs held with banks and building societies have been effective interest rates. For further details, see Statistics article ‘Amendments to Divisia money series’. Before January 2011, rates of return were averages of quoted rates.
Benchmark asset
The Divisia index uses an envelope approach, which assumes that, within the household sector and the corporate sector, the benchmark asset is the component of M4 that pays the highest interest rate after tax is taken into consideration.
For more details on the theory behind our Divisia money series, see Statistics articles ‘Divisia measures of money’ and ‘Divisia money’.