The Bank of England’s pledge to keep the base rate at 0.5 per cent until the UK’s employment rate falls below seven per cent has been broadly welcomed by a Warwickshire wealth management expert.
Angela South, managing director of Magna Wealth Management, said there needed to be a trade off between the disappointment of savers at current levels of interest rates, and the short to medium term need for conditions that promote growth.
“Bank of England Governor Mark Carney has, in my opinion, given all the right signals to the market.
“He has said that unless inflation spikes the base rate will remain at 0.5 per cent until the employment rate drops below seven per cent,” she said.
“I know that many savers are very disappointed at the below inflation returns they are currently getting from money deposited with banks or building societies, but there are other forms of investment and it might still be possible to achieve above inflation returns,” she said.
“A low interest rate environment, on the other hand, provides the growth conditions which we are already seeing in the housing sector, both in building and sales, and the continued strength of manufacturing – for so long the sickly relative of the British economy.”
And she pointed out that getting more people into work would mean increased tax take and further boost the Government’s finances as its austerity programme continues to bite.
“At last the UK is getting the message – sometimes you have to take your medicine, but it doesn’t always have to taste bad. Governor Mark Carney’s thinking is on the right lines and should help further promote the encouraging signs that we are seeing,” she said.