Savers stand to lose as much as £33bn over the next three years due to new policies on interest rates and inflation, calculations for The Telegraph show.
The Bank of England has condemned savers to this fate by allowing inflation to soar above interest rates until at least 2016, campaigners said.
When inflation is higher than the return on savings, money held on deposit effectively loses its value – in other words, the cash grows more slowly than the cost of living. This is happening today because the average savings account pays 1.66pc, while inflation is 2.8pc.
The Bank of England is supposed to use higher interest rates to keep inflation under control at 2pc. But in a radical policy shift, it said policymakers will not worry about high inflation unless the expectations rise above 2.5pc.
The new head of the Bank, Governor Mark Carney, has indicated Bank Rate will only rise from its record low 0.5pc when unemployment – a gauge of Britain’s economic health – falls from 7.8pc today to below 7pc. The Bank’s economists do not expect this to happen until 2016. » | Dan Hyde | Tuesday, August 20, 2013
My comment:
Mark Carney's policies are irresponsible. Indeed Mark Carney is irresponsible; and the man's abilities are very much over-rated. The Bank of England and the government owe savers and pensioners a duty of care; instead, however, they are throwing them to the lions! – © Mark
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