Rates Pressured Higher Right Now
10/21/2009
There’s little prospect for higher interest rates in the next few years, says Vince Malanga of LaSalle Economics. “The economy is growing but not rapidly—not enough to ignite inflation,” he says. “Banks are being accommodative in the interest of helping the economy.” Federal Reserve Chairman Ben Bernanke’s reappointment with the understanding that rates would remain low strongly supports that view.
Critics, however, caution that warning signs that this policy is the wrong choice include core inflation heating up, inflation-adjusted Treasury bonds becoming a more popular investment, or foreign creditors boycotting U.S. debt, leading to a currency crisis.
