Tell these Americans that the economy is humming, that median wage growth has nudged ahead of the core inflation rate, and that everything’s grand, and you’re likely to see a roll of the eyes.
Tell these Americans that the economy is humming, that median wage growth has nudged ahead of the core inflation rate, and that everything’s grand, and you’re likely to see a roll of the eyes.
China just dropped interest rates.
This world is not the world of 20 years ago.
Currant inflation is being caused because of high interest rates. Mortgages cost more, so landlords (40% of which are small mom and pop ordinary people renting a second home) increase the rents. It takes years for all the mortgages to flip over to the higher interest rates, so we’ve see this persistent and high inflation.
Lowering and raising interest rates directly correlates with the increasing or reducing inflation.
When rates are high there is less money in the market because people by bonds because they guarantee a return of x%. This means there is less money in the market and the currency becomes stronger.
When rates are low money floods the market as people acquire assets, property etc The decreased price of loans like mortgages results in increased demand which results in more expensive houses.
If you have a lot of cash buying a house in a high interest market is actually the best case because houses have to be priced lower to compensate for the mortgage costs.
All that being said China lowering it’s interest rate will make loans cheaper but increase inflation. They have a weird real estate market though.
Meh. When you raise interest rates, companies raise prices, and go on borrowing. Raising rates doesn’t help fight inflation.
We are now seeing housing starts grinding to a halt, as average people stop buying homes do to high interest rates. These stories are starting to trickle into the press. Housing developers are calling high interest rates a disaster and economic killer. Politicians and banks listen to housing developers. The anger is building against bankers that believe simple stories such as ‘Lowering and raising interest rates directly correlates with the increasing or reducing inflation’, the real world is never that tidy.
A significant portion of inflation is just corporate greed trying to camouflage itself in necessity. Actual pure economic inflation doesn’t coincide with so many businesses achieving record-breaking profits