Lower interest rates not good for everyone

Hal Morris, who writes on the grumpyeditor.com blog, notes that the coverage of lower interest rates ignores the fact that lower rates are bad for some people.

Morris wrote, “But for others, especially budget-pinched families and retirees depending on supplemental monthly income, ‘lower interest rates’ also means less yields on savings instruments, including certificates of deposits, reminds Grumpy Editor.  That aspect has not been widely reported in the business press.

“Amid cries about a credit crunch, which has been mentioned as a cause of the recent zig-zag stock market, most financial institutions have quietly clipped CD rates.  That action started in early August.  CD holders, especially those about to renew maturing certificates, are grumbling at the sudden ‘lower interest rates.’

“Yields on CDs will erode further with looming cuts in the Fed funds rate. Less income via interest to savers means many consumers will have slimmer wallets, putting a squeeze on year-end holiday sales.”

Read more here.