The Fed meets again this week. It’s likely to keep interest rates low for a while.

Justin Ho Nov 2, 2020
Heard on: Marketplace Morning Report
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With bank accounts paying next to nothing in interest, some people are starting to spend their money. Daniel Slim/AFP via Getty Images

The Fed meets again this week. It’s likely to keep interest rates low for a while.

Justin Ho Nov 2, 2020
With bank accounts paying next to nothing in interest, some people are starting to spend their money. Daniel Slim/AFP via Getty Images
HTML EMBED:
COPY

There’s a lot of uncertainty in the economy right now, with the pandemic, the question of a further relief package from Congress and the election. But there is one thing we probably can count on: low interest rates.

The Federal Open Market Committee meets this week, and the guardians of interest rates are likely to keep rates low for quite some time.

Ever since the Fed cut rates to near zero in March, things like mortgages and auto loans have gotten really cheap.

Chuck Tomes at Manulife Investment Management said we can expect that to continue.

“So you look at the housing market continuing to do well,” Tomes said. “You’re seeing good demand for used cars.”

Savings rates spiked early in the pandemic. But with bank accounts paying next to nothing in interest, some people are starting to spend their money, said Winifred Cisar at Wells Fargo.

“We’re seeing that in some parts of the economy already, in terms of the home repair market, retail, online sales,” Cisar said.

Low rates on government bonds have pushed investors to lend to corporations, which can be riskier but offer better returns.

Cisar said that has helped many businesses avoid defaulting on their existing debt.

“That, I think, is really what the Fed was going for back in March, and will continue to convey to the market,” she said.

Cisar said the Fed will also continue to pressure Congress to provide more fiscal relief to the economy.

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