RateAPY

Interest Rates May Increase as the U.S. Economy Strengthens

Posted by: RateAPY Bank Rates News
January 12th, 2010

Will the U.S. economy be strong enough to warrant the Federal Reserve increasing interest rates in 2010?

New concerns about the strength of the U.S. economy and the role China and India will have in the global recovery caused U.S. Treasury sales to improve. China increased its benchmark money market rate to slow down lending. Investors responsible for bidding on U.S. debt instruments are taking pause to determine if the recent rally of stock prices is yet deserved.

If the economy stagnates or grows too slowly, there would be little to no motivation for the Federal Reserve to begin raising interest rates. As long as the fed funds target rate stays at 0.000% to 0.250%, bank interest rates will hold steady at the current low levels. This means that the interest you can earn on your savings accounts, money market accounts, or certificates of deposit could be near current levels for some time.