In 2025, inflation and interest rates continue to shape investment decisions across the UK. These two forces can erode purchasing power, shift asset performance, and influence your investment strategy.

Inflation’s Impact
Rising inflation means your money buys less over time. It can reduce real returns on cash and fixed-income investments. However, certain assets—like equities, commodities, and inflation-linked bonds—often provide better protection.

Interest Rates’ Role
The Bank of England’s interest rate decisions influence borrowing costs and bond yields. Higher rates typically hurt bond prices and high-growth stocks, but benefit savers and income investors.

How to Adapt

Inflation and interest rates are part of the economic cycle. Smart investors adjust, but don’t overreact.

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