ING DIRECT is slashing the interest rate on its popular savings account from 5% to 4.75% — even though the Bank of England base rate, the yardstick for UK interest rates, has not moved since August 2004.

The move follows a rash of cuts by rival banks and building societies, including NatWest, Lloyds TSB, Cheltenham & Gloucester, Birmingham Midshires, Alliance & Leicester and HSBC.

Birmingham Midshires is among the worst offenders. It recently dropped the rate paid to savers with £5,000 or more in its instant-access savings account by 0.35 percentage points.

Meanwhile, Lloyds slashed its Reward Saver rate for those with £500 or more by 0.15 points on June 17.

Sue Hannums of Chase de Vere, an adviser, said: “It is grossly unfair for banks to chop rates when base rate hasn’t moved. They’re cutting their costs at the expense of their savers and I would be very surprised if they did not reduce their rates again if base rate falls later this year.”

Savers are particularly disappointed that ING, which has prided itself on offering consistently high rates to all customers in the past, has chosen to cut its rate at this point.

Catherine Jordan, a 32-year-old marketing consultant from London, pictured with her 15-month-old daughter India, said: “I will not switch banks on the basis of this cut, but I would consider switching if the rate fell again.”

Officially, ING is blaming the rate cut, due to come in on August 1, on falls in the money markets, where banks invest to finance savings deals.

When asked why ING was cutting its rate when base rate had stayed the same, Lindsay Sinclair, its chief executive, said: “The main problem is that the money markets have been factoring in the possibility of a base-rate cut for some time.

“We aim to deliver a simple, easy-to-understand account that pays everyone the same rate and I think that we are still the best at doing that despite this cut.”

However, analysts dismissed his argument: fixed rates often follow the money markets, but variable rates rarely do so. There is also no guarantee that ING will refrain from further cuts if the Bank of England actually reduces base rate — as it is expected to do in August.

Four of the nine members of the Bank’s monetary policy committee voted for a cut in July, according to minutes published last week, and the markets expect a majority to opt for a reduction next month.

Other banks try to justify their moves by cutting rates only on some accounts, so that they can continue to laud the returns on other schemes.