Inflationary Pressure May Curb Interest Rate Cuts
While you would be mistaken for thinking that the attitude of the Bank of England towards further base rate cuts had softened of late, the prospect of inflation creeping higher seems to have ended hopes of cheaper loans in the short term. The LIBOR (London Interbank Offered Rate) had been falling for the last few weeks as normality seemed to be returning to the market, but the rate increased after the latest inflation forecast from the Bank of England.
In the recent boom time the government were very quick to pat themselves on the back and claim that they had “broken the back of inflationâ€, but this is far from the case in reality. This is the same government who also claimed that they had also re-written the boom and bust economic cycles which have been around for hundreds of years.
The truth is that inflation will always be a danger and it is near impossible to escape from the boom and bust scenarios which we have experienced time and time again. While general living costs have been rising for some time, a large chunk of this is down to the rising price of oil which impacts on all areas of the economy. Until the price of oil falls back substantially the threat of rising inflation will not be far away.
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