Putting up interest rates to ‘control’ inflation is a blunt instrument at best. The theory is that we won’t be able to afford stuff if it’s more expensive to borrow money to buy it. I’m only an ‘A’ Level economist, but I don’t think it’s ever worked. And now, as it’s stuff we have to buy to survive which is putting up prices, it’s more like a mediaeval siege engine than a blunt instrument. What we need is a variation on the 1970’s ‘prices and income’ policy still controlling prices but actually increasing incomes. Otherwise the poor will just get poorer.
“The true impact of inflation on cash savings and pensions”
Leaving your money in the bank or building society has always meant that its ‘real value’ after inflation will go down. Although rates go up to, supposedly, control inflation, any chart you look at will show that, apart from a few very short-term blips (N Lamont, I’m looking at you) they are never more than inflation.
