Inflation begins to bite


ON THURSDAY the Bank of England (BOE) rate committee met to discuss interest rates and even though inflation is growing, yet again they have decided to leave the base rate at 0.25%, they feel this is the best option as they assess the extent of any consumer slowdown while waiting to see how EU Brexit divorce negotiations pan out.

The BOE seems to be playing a wait and see game, with economic news being negative in the last few weeks. So it now seems like rates may stay at this level until at least 2019.

With inflation rising in recent months, hitting its highest level in more three years at 2.3% in February, and remaining flat at 2.3% in March, this means in real terms with low wages growth and little to no growth on savings held in Banks and Building societies people are worse off month after month.

We all know interest rates offered to Savers have been low to zero in the UK and across Europe for years now, but that didn’t seems to matter when inflation was at zero or negative, but now it is a worry as the effect of inflation means that the buying power of the cash you have is gradually decreasing

Arguably, many savers with decent pots should invest some of their money over and above a rainy day (contingency) fund. Savers are missing out on the potential for better returns by not doing so, but they are also avoiding the chance of losing money if markets fall. But the savvy savers are realising that nowadays they have to accept some risk if they are going protect their money against growing inflation that will diminish the real value of their savings.

Be smart with your money, if you would like advice on what’s on offer I am here to help you. To arrange an independent, professional and impartial consultation or review of your current banking / investment portfolio, please contact me by email or call me on 658 892 330.

• The above information was correct at the time of preparation and does not constitute investment advice and you should seek advice from a professional adviser before embarking on any financial planning activity.

• Blacktower Financial Management Ltd is authorised and regulated in the UK by the Financial Conduct Authority and is registered with both the DGS and CNMV. Blacktower Financial Management (Int) Ltd is licensed in Gibraltar by the Financial Services Commission (FSC) and is registered with both the DGS and CNMV in Spain.

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