Fed Chairman Says Inflation Still not a Concern in Senate Testimony
In Senate testimony yesterday, The Federal Reserve Chairman, Ben Bernanke, defended the fed's stimulus policies and said their policies still are not causing inflation nor will it do so in the future. Critics of the fed's policies believed keeping the fed funds rate at zero percent, buying $85 billion a month in U.S. Treasuries and mortgage-backed securities would fan inflation. Unfortunately, low inflation also means low interest rates on all types of deposit accounts.
On our rate tables this week the best savings rates are still at 1.00 percent and the best money market account rates have fallen to 1.01 percent APY. Both savings rates and money market rates have hovered just above 1.00 percent for the past year. Average savings rates this week remain unchanged at 0.07 percent and average money market rates remain unchanged at 0.12 percent.
The Federal Reserve has kept the fed funds rate near zero percent for over 4 years now and look to do so until the end of 2015. Whether or not rates move higher before the end of 2015 depends on the unemployment rate falling below 6.5 percent, which the fed believes will happen by the end of 2015.
The biggest drag on the economy the past year has been government employment. Over the past year, 500,000 government jobs have been lost which has negatively impacted GDP growth. If the economy is also hit with sequestration in March, we can expect more jobs to be lost. In fact, the threat of sequestration has already caused a loss in jobs as companies have held back investing and hiring.
Once we get past all of these self-inflicted deficit issues, the economy should take off. Unemployment will drop and interest rates will move higher. I do believe this can happen before the end of 2015 but Washington has to work together for all of this to unfold.
Right now on our rate table the highest savings rates are from CIT Bank and Barclays Savings Bank at 1.00 percent. The highest money market account rates are at 1.01 percent APY from EverBank. You can search for the best rates by using our rate database - we list rates based on account balance. We also have databases of the highest IRA money market rates, jumbo money market rates and jumbo savings rates.
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