Margarita M. Phillips 
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While there have been a lot of headlines and criticism about inflation lately, so far interest rates, which tend to rise with inflation, have remained low. Rates on everything from savings accounts to mortgages continue to rebound near all-time lows.
The question is, how long can this last?
One school of thought, put forward by the Federal Reserve, is that inflationary pressures, which are now manifested in higher prices for everything from used cars to factory wages, are “transient” and will begin to recede as they go. that pandemic labor and supply chain shocks will subside.
Others think inflation is here to stay. This could have a negative impact on stocks and bonds. This is because the fate of stocks and bonds, as well as many other investments, is intimately tied to interest rates.
When rates are low, as they’ve been for a decade, businesses pay less to borrow and have more to spend, which boosts profits. When rates go up, the reverse happens: higher borrowing costs, lower profits, lower stock market profits.
Rising rates also mean that safer investments, like savings accounts and government bonds, will look more and more attractive compared to stocks, causing money to flow out of stocks, pushing down the prices.
What should an investor do? This is what “money!” from this week! podcast is on. We will explore specific investments that can not only survive, but also thrive in rising rate environments.
As usual, my co-host will be financial journalist Miranda Marquit. Newbie producer and investor Aaron Freeman listens and sometimes contributes.
Sit back, relax and listen to “Money! »From this week Podcast:
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Show Notes
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