Inflation rate goes avove 4%

[rov1100]

This means the major items in your shopping basket increase by around 4%

However the bank interest rate stays at 1/2% which means savings are based about this level.

http://www.bbc.co.uk/news/business-12462901

Who gains from this wide discrepency?

[Buenchico]

Irrespective of the rate of inflation, a low base rate always operates against the interests of savers but in the interests of borrowers (such as people with mortgages).

Chris

[R1Geezer]

Interest rates need to rise to control inflation but that would make the borrowers scream blue murder, who says the BOE makes it's own decisions, without political influence they'd have raised them a year ago.

[DaisyNonna]

Am a saver. What could I borrow for?

[Quizmonster]

So presumably, R1G, for the past nine months the supposedly independent Monetary Policy Committee of the Bank of England has been operating under TORY "influence". Sounds a bit underhand to me!

[jake-the-peg]

The banks need to recapitalise.

they have been told by governments that they need to have more money "in stock" to back up their lending so that they don't get into the same mess.

It's a half-hearted attempt because if they do get into trouble with silly risk taking again we'll *still* have to bail them out again.

And until they split the retail banking from the casino gambling on derivatives and futures and the like we'll be in the same boat.

On a totally "unrelated" note most of the Tory party's election campaign was funded by people in the city

[R1Geezer]

The MPC has ostensibly been independent since noo Labour made them so. There is no direct government control but you can see they are not making decisions pragmatically on economic issues. both the Toryberals and Nooo Labour seem to have some sort of indirect control.

[rov1100]

I would think that anyone with a huge amount of debt would make it favourable toi them People with mortgages gain because their assets should increase in value over time near to the inflation rate

Also the government gains beacuse its outstanding dept is eaten away by inflation. Put yourself in the position where you owed £6000 just 25 years ago when you could have bought a cheaper property.. Because of the rise in inflation since that debt to many is peanuts today and would not pay for a small extension.