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14 Sep 2016

Altmann calls for BoE to asses the impact of its policies

The Bank of England is being put under increased pressure to launch a national inquiry into the effects that ultra-low interest rate will have on savers, The Telegraph reports, with pensions expert Ros Altmann CBE recently adding her weight to the issue.

Following a host of cuts to the Bank of England´s base rate over the past few years, savings rates have hit a rock-bottom low of 0.25%. As young people trying to get on the property ladder and pensioners face increasing hardship, financial experts have likened the monetary policy to a “tax increase.”

Baroness Altmann agrees that these policies are impacting modest- and middle-income homes like an additional tax; whilst also benefitting the wealthiest 5% of savers, who can access cheaper borrowing.

In an extra blow, the Bank of England´s own data reveals that while its rates have lowered, borrowing rates at banks and building societies have actually increased, making things even harder for ‘ordinary´ people.

Increased interest rates on loans, credit cards and standard variable mortgages have allowed these institutions to gain extra profit over the past few years. While the average ISA rate has fallen by 1.77%, credit card interest rates have risen by 1.23%; overdraft rates by 0.3%; and standard variable mortgage rates by 0.22%.

Altmann is now urging the Bank of England to conduct a major inquiry into how these monetary policies are affecting citizens and their pension funds. Some of the people most affected by such policies, she explains, are people saving for their first home and those relying on cash pots, such as pensions, for income.

“The rise of anti-establishment nationalist movements, epitomised by the Brexit result, may reflect anger at the financial difficulties facing some parts of the population, which policymakers have failed to recognise,” she advised.

“Politicians might like to consider how this balance of winners and losers fits with a desire to help the many, rather than the privileged few.”

Copyright M2 Bespoke 2016

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