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Interest Rates Likely to Remain Low Due to Low Inflation

Posted by: RateAPY Bank Rates News
June 3rd, 2010

Analyst Predicts Low Inflation

Ray Dalio of Bridgewater Associates spoke to SmartMoney.com and offered a prediction that inflation would remain low. Low inflation means the Federal Reserve will likely keep interest rates low to stimulate the economy.

Refinancing–But No Debt Reduction

Dalio’s interesting commentary included these points:

• Governments around the world are printing money like never before, but with very little result.
• Another recession is likely, and due to the current opinion that banking bailouts and large deficits are unsavory, the government will have fewer tools for stimulating the economy.
• There is still too much debt. There has been no significant reduction in debt, just refinancing and an extension of maturity dates, pushing the problem out to 2012-2014.
• The European debt crisis dwarfs that of the past Latin American crisis and the Asian Contagion. Refinancing debt is likely to be a serious problem in many European countries.

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