Interest rates take time to impact inflation

It will take a long time for increased base interest rates to have an impact on inflation, according to a leading economist.

In an interview with Mickey Clark, presenter of the Cost of Living Rises on the BBC's Wake up to Money Show, George Buckley, chief economist at Deutsche Bank said the delay may be why the Bank of England does not see raising interest rates as a priority.

"If you see inflation high now, that is not the important point; it is where you think it is going to be in one to two years' time and the Bank thinks it is going to be less than target and this is why they probably don't need to raise interest rates aggressively to deal with this," Mr Buckley explained.

BM Savings will be launching two bonds in June for customers seeking to protect their money from rising inflation and get the best savings interest rates.

Moneyextra.com recommends you take independent financial advice before acting on any article

Back

2011-03-23 12:45:27 © Moneyextra.com