Interest Rate Affects Inflation
According to the Motley Fool, while the Bank of England’s decision to cut interest rates was not a surprise, it does increase concern for inflation. The interest rate cut, bringing it down a quarter of a point to 5.25 per cent, comes in the midst of increasing energy prices and some of the highest oil prices on record.
The Motley Fool explains that the Bank of England’s decision was based solely on avoiding economic recession. Specifically, David Kuo, head of personal finance at Motley Fool says, “consumers should be aware of the damaging effects of inflation even if the Bank of England chooses to ignore it for now. In order to beat rising prices, we need to ensure that any savings we have will guarantee a better return.”