| Bank CD rates are moving higher as the | | | | Fed Funds rates if it hopes to at least |
| Federal Reserve Bank continues it's | | | | slow down the increase in the inflation |
| "measured" effort to control inflation | | | | rate, it means that investors in bank |
| by raising the Federal Funds rate. The | | | | certificates of deposit will be |
| US economy is still growing at a | | | | recieving more income from their CD |
| reported 4%-5% rate and is beginning to | | | | investments than over the past few |
| show increases in the inflation rate, | | | | years. |
| especially in the food and energy | | | | Alan Greenspan and company held interest |
| sectors, which the government manages to | | | | rates at artificially low levels for too |
| leave out of the core CPI calculations. | | | | long, flooded the world with dollars, |
| Government economists seem to believe | | | | and now the financial imbalances that |
| that if they just leave out the costs of | | | | these policies created have to be |
| food and energy prices increases in | | | | addressed. The market will eventually |
| those important areas won't effect you | | | | see to that. |
| and the rest of the US population. | | | | This is good news for long suffering |
| Obviously that's strange thinking. | | | | certificate of deposit investors. Bank |
| However, the US government has made sure | | | | CD rates at artificially low rates have |
| that their government economists use | | | | been punishing to the nations CD |
| creative calculation methods over the | | | | investors, especially those who are |
| years which has tended to show better | | | | retired and look to CD interest income |
| performance for the US economy than | | | | to help them to meet daily living |
| would be the case with previous | | | | expenses. |
| calculation meathods. | | | | Probably CD rates will trend higher for |
| With commodity prices, especially metals | | | | the next few years. The unfortunate |
| like copper, gold, lead, tin, and zinc, | | | | thing is that while you as a CD investor |
| and crude oil soaring to all time highs | | | | will receive more CD interest income you |
| on increased world demand, especially | | | | will also be paying higher prices for |
| from rapidily developing countries like | | | | just about everything that you must |
| China and India, there is the strong | | | | purchase. But at least with additional |
| probability that interest rates will at | | | | certificate of deposit investment income |
| some point react to inflationary | | | | being earned there will be more income |
| pressures and surprise on the upside as | | | | to offset the higher expenses. |
| this business cycle progresses. | | | | While you as a CD deposit certificate |
| It appears that it is already too late | | | | investor will benefit as CD rates move |
| to head off a a serious dose of | | | | higher you should not get lazy and just |
| inflation no matter what the US Federal | | | | go along with the ride. What may seem |
| Reserve Bank does from here. The US has | | | | like small differences in CD rates |
| flooded the world with US dollars for | | | | offered by competing banks may actually |
| too long and the financial trade and | | | | amount to significant percentage |
| deficit imbalances are too great. There | | | | differences in overall certificate of |
| is a high risk that the US Dollar is in | | | | deposit returns. |
| danger of a sharp decline at some point, | | | | By switching your CD investment to a |
| which will only increase inflationary | | | | FDIC bank paying higher CD rates (HINT: |
| pressures in the US. Hold onto your | | | | Internet banks have far lower operating |
| hats, folks, you haven't seen anything | | | | costs than traditional banks and can |
| yet. | | | | afford to pay higher CD rates ) you can |
| As bank CD rates are directly tied to | | | | achieve higher income for a minimum |
| the Federal Funds rate, and the Federal | | | | amount of effort. |
| Reserve will have to continue to raise | | | | |