The Bank of England has been told it must start raising interest rates in order to protect savers and pensioners from inflation.
With the base rate of interest having remained at its record low of 0.5% since March 2009, savers young and old have struggled to find savings accounts paying a decent rate of return.
At the same time, inflation has remained relatively high, meaning savers have lost out as a result of their incomes falling in real terms.
As the Bank prepares to deliver its first rate setting decision of 2011 on Thursday, pensions expert Dr Ros Altmann believes the time is right for rates to begin to rise.
"Rates were brought down to these levels as an 'emergency' measure to stave off potential deflation, but they have not been returned to more appropriate levels, despite the emergency situation having long since passed," explains Dr Altmann.
"With the latest increase in VAT, petrol and food prices, anyone on fixed incomes or trying to live off the income from their savings is suffering from the effects of inflation.
"Heating, clothing and insurance costs are also rising sharply."
Calling for the Bank of England to take positive action this week, Dr Altmann said that the risks of not raising rates now outweigh the risks of a rate rise.
"Despite the Government's forthcoming measures to reduce the budget deficit, rising interest rates are unlikely to hamper growth," she adds.
"If rates do start to rise from the current exceptionally low levels, this could actually help growth and markets."
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