U.S. Economists Warn Initiation of a Continued Period of Higher Interest Rates
Economists are intimating that with revival of the U.S. economy, the consumers will have to deal with another problem i.e., persistent period of intensifying interest rates. This has been predicted to be the outcome of the swelling debt of the nation accompanied by the altered outlook of inflation because of healing of the economy from recession.
This prediction if it comes to be true, will definitely upset consumers spending as they have been use to the spending convention according to the 30-years of decline in the cost of borrowing.
According to Bill Gross of investment firm, Pimco, Americans have never thought that the scenario can even change this much, as they have always “assumed the roller coaster goes one way” and that the great thrill of the declining rate would soon come to an end with phase of “extended climb".
It is being predicted that the elevated rates will affect initially the housing market, as it is the one that has recently witnessed revival. 30-year fixed mortgage rates have increased half point since December and it reached 5.31 last week. The rates are facing additional pressure from the Federal Reserve that has stopped the progress of its emergency $1.25 trillion program that intended to purchase mortgage debt.
David Wyss of Standard & Poor's stated, "We've had almost a 30-year rally. That's come to an end".
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