The two-club golfer has bunkered again

The Motley Fool comments on the Bank of England interest-rate decision

David Kuo, Director at the financial website The Motley Fool – Fool.co.uk, says: “The Bank of England is no longer a one-club golfer but it now has two clubs in its bag to tackle the twin threat of sticky inflation and stodgy economic growth. Unquestionably, pumping money into the economy has helped to improve liquidity and keeping the base rate low has eased the debt burden on borrowers.

“However, the Bank of England cannot ignore inflation. It may choose to look through the short-term inflation numbers and instead focus on the medium term. But a jump in the Consumer Prices Index from 1.9% in November to 2.9% in December is a significant increase.

“The question is not whether the Bank of England can tame inflation over the medium term but how high will it allow inflation to rise before it hikes interest rates. If the central bank is unwilling to protect our savings from price erosion then it is up to us to do so ourselves.

“Unlike the Bank of England, we have many more clubs in our bag at our disposal. But it is important to choose the right one to avoid hitting the bunkers. Over the long term, only two such assets have successfully outpaced inflation. These are property and the stock market.”

-ENDS-

For further information and/or to arrange an interview with David Kuo on economic affairs and breaking financial news stories, please contact:

Sonia Rehill on 020 7025 8576 or Soniar@fool.co.uk

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