Pensions & Investments writes, "It's time for the Fed to raise interest rates." They comment, "The Federal Reserve's low-interest-rate policy must end. The policy helped the economy recover from the depths of the Great Recession, but the economy is now strong enough to withstand higher rates. While the low-interest-rate policy helped the wider economy recover, it harmed parts of it. Many observers have noted the impact of the low interest rates on savers, particularly those retirees who have much of their retirement savings in money market funds and bank savings accounts. Those retirees found their savings greatly reduced by daily living costs because of the ultralow interest paid on such accounts. Few have noted the impact of the low rates on defined benefit plans, and the companies and government entities that sponsor them. Low interest rates have greatly weakened pension plans and accelerated the trend away from them in the private sector. The decline in rates since 2007 has pushed unfunded liabilities up, and the strong stock market recovery since 2009 has not been enough to bring liabilities down, even though companies and many state and local governments have contributed billions to their plans." They add, "Companies also need cash reserves against unforeseen crises. It's not surprising that cash reserves have risen since the recession, when companies failed after they ran out of cash and no institution was willing to lend.... These pressures on pension plan sponsors, private and public, could be greatly eased by higher interest rates. The Fed should wait no longer to push rates up."

Email This Article




Use a comma or a semicolon to separate

captcha image

Daily Link Archive

2024 2023 2022
March December December
February November November
January October October
September September
August August
July July
June June
May May
April April
March March
February February
January January
2021 2020 2019
December December December
November November November
October October October
September September September
August August August
July July July
June June June
May May May
April April April
March March March
February February February
January January January
2018 2017 2016
December December December
November November November
October October October
September September September
August August August
July July July
June June June
May May May
April April April
March March March
February February February
January January January
2015 2014 2013
December December December
November November November
October October October
September September September
August August August
July July July
June June June
May May May
April April April
March March March
February February February
January January January
2012 2011 2010
December December December
November November November
October October October
September September September
August August August
July July July
June June June
May May May
April April April
March March March
February February February
January January January
2009 2008 2007
December December December
November November November
October October October
September September September
August August August
July July July
June June June
May May May
April April April
March March March
February February February
January January January
2006
December
November
October
September