It’s every man for himself now

The Motley Fool comments on the Bank of England Quarterly Inflation report

The Bank of England has revised down its growth forecast for this year and sounded a cautious note on inflation. Growth in 2011 is likely to be 3.2% rather than 4% and inflation is likely to peak at about 3.3⁽¹⁾.

David Kuo, Director at the popular financial website The Motley Fool – Fool.co.uk comments: “The last thing the UK needs right now is an economy on Prozac and inflation on steroids. To make matters worse, hopes of an export-led recovery have been dashed with the trade gap widening to £3.3b in December ⁽²⁾.

“For now, the Bank of England has chosen to focus on the greater of the two evils, namely to prevent the UK economy slipping back into recession. Consequently, interest rates are likely to remain low, even though inflation would suggest that it do otherwise. Additionally, more money is likely to be pumped into the economy through Quantitative Easing.

“The actions of the Bank of England will come at a price, though. The money that we print today will have to be paid back tomorrow. Moreover, any money we have today will be worth less tomorrow as inflation erodes its value.

“It is therefore vital that we safeguard our savings against inflation by investing in inflation-beating assets such as shares. The Government with its deficit-ridden budget will be powerless to help. It’s every man for himself now.”

-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

An ISDN line is available for radio interviews

Notes to Editors:

1) Inflation Report February 2010 (Bank of England: 10 February 2010)

2) Deficit widened to £3.3bn in December 2009 (ONS: 9 February 2010)

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