Interest rates are rising!

For the past several years, interest rates have been quite low, which depending on what market you're in, could be a blessing, or a curse. For example, if you were a first time home buyer, or just an active real estate mogul, the lower interest rates were great, especially if you were able to get in on a fixed rate mortgage. However, if you were a saver, from any income bracket, the lower rates weren't quite as attractive, and almost served as a dissinsentive for saving. In a Finance Article I read today, it commented on the recent hikes in interest rates, due primarily to the fed increasing the rates. Basically, if you are wanting your money to work for you, interest rates are higher than they have been in a long time, and offer a reason to save! This article stressed some of the benefits of investing money in short term cds, etc through the bank because of the possibility of rates increasing even further in the future. Hypothetically, because more people will be saving, there will be a larger pool of funds available for others to borrow, which could potentially cause a whole new wave of creativity, production, and innovation. It will be interesting to see how the economy responds to these recent changes in interest rates, and how industry will ultimately be affected as a result.

1 comment:

Dr. Tufte said...

-1 on Morgan's post for capitalization errors.

This post makes a sublte and often unappreciated point. That is, that the interest rate is a price, and price changes are not inherently good or bad. They are only good or bad for some people in some situations.