Inflation Threatens To Press Interest Rates Higher
As savers, consumers are stuck with rates on savings accounts, money market accounts and CDs that are near zero. Even with moderate inflation, savings accounts were losing purchasing power, and those losses will accelerate if inflation picks up faster than bank rates rise. So far, that race is simply no contest.
On the borrowing side, consumers are already facing higher mortgage rates. Banks have been quick to raise mortgage rates so they don't get caught short as interest rates rise, and they will be even more aggressive about raising those rates if there is a whiff of inflation in the air.
Looking forward, if interest rates are pushed higher by continued improvement in the economy, that will mean they are being driven by demand, and there are certainly some benefits to that for consumers. However, if rates are pushed higher by inflation, that means they are being driven by fear, and that's not a good situation for consumers.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV