why interest rates of 5% encourage saving, when inflation is 5% in the UK

Question

why interest rates of 5% encourage saving, when inflation is 5% in the UK

In: Economics

Answer 1

>why interest rates of 5% encourage saving, when inflation is 5% in the UK

If the return on an investment is higher than the return on alternative attainable investments, then that’s a good investment. Inflation doesn’t really factor into this.