Even Without a Double-Dip Recession, Best Savings Rates Could Remain Low for a Long Time
June 17, 2010
The dreaded term "double-dip recession" has been bandied about lately by traders and economists as the European debt crisis, high unemployment, and concerns over the US banking system continue.
But Federal Reserve Chairman Ben Bernanke countered fears this week when he said the US economy seemed to be on track, and he didn't expect it to dip back into recession.
"My best guess is we'll have a continued recovery [but] it won't feel terrific," MarketWatch reported Bernanke saying in an interview with ABC News reporter Sam Donaldson. Bernanke spoke with Donaldson at a dinner sponsored by the Woodrow Wilson International Center for Scholars.
High Unemployment and Low Savings Rates
The Fed chairman noted a promising return of consumer spending and some encouraging spending by businesses. Still, unemployment remains stubbornly high. Almost all of last month's 431,000 new jobs were temporary US Census jobs, which will end in months.
The troubling jobless rate as well as low inflation are keeping interest rates at historically low levels. That's good news for mortgage borrowers, but bad news for investors waiting for better yields on deposit accounts. When will the tide turn?
Federal Reserve Bank of Chicago President Charles Evans said he doesn't see "any hurry" for the US central bank to raise its key short-term federal funds target rate, and he expected the Federal Reserve to "continue to have accommodative policies for quite some time," the Wall Street Journal reported. Although the Fed doesn't directly set consumer interest rates, its policies heavily influence banks as they set lending interest rates, money market rates, savings account rates, and CD rates for consumers.
