Potential for Inflation Threatens Consumers
This week’s decision by the Bank of England to cut interest rates has the potential to increase inflation, cautions Fool.co.uk.According to the price comparison service, many experts had anticipated the move to lower the borrowing rate to 5.25, a reduction of a quarter-point. Nonetheless, higher oil prices and increases in energy costs have already stimulated inflationary pressure, and the rate cut could increase that pressure.
The fear of recession seems to be more important to the monetary policy committee than the threat of inflation, according to Fool.co.uk.
David Kuo, head of personal finance for the web resource warns consumers to shop for the highest return on their savings. The Bank of England may choose to ignore the problem, but inflation can eat into personal savings.
The demand for secured loans is expected to increase during the first three months of this year as other sources of credit dry up, according to the Bank of England.