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Landmark’s Blog
Artifically low interest rates
Published on 23rd June, 2011 at 10:47 by Eric Mowinski B.Sc.
The Bank of England is keeping interest rates at artificially low levels. How is this impacting investors?
One of the biggest challenges investors face in the current economic environment is the Bank of England policy to keep interest rates artificially low.
If we look at the reported rates of inflation between 4%-5% per annum depending on which reading you use, you would expect the Bank base rate to be significantly higher.
Base rate should be around 3%-4% and Bank deposit interest rates would produce returns of may be 5%-6% on longer terms.
For those investors who wish to keep their money on a risk free basis, they are being penalised and if inflation remains high within the current Bank of England policy, the cost of holding risk free assets increases.
Posted under the following tags: investment, bankofengland, interestrates.
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