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<div class="KonaFilter image-container display-table float_right"><div><div class="image">REUTERS/Jim YoungDonald Trump.</div></div></div>If Donald Trump were to become president, one of his many important responsibilities would be appointing the governors of the Federal Reserve, who set monetary policy and drive interest rates in the US.This week, Trump gave <a href="http://fortune.com/2016/04/21/donald-trump-q-and-a/">an interview</a> to Fortune magazine in which he discussed how he might approach this task. The interview is about as enlightening as you would expect.First, Trump made a strong argument that low interest rates are good:We have to reduce our debt, and the best thing we have going now is that interest rates are so low that lots of good things can be done that aren't being done, amazingly.He continued, noting that low rates are bad:The problem with low interest rates is it's unfair that people who've led the American way of life-the true American way of life-that have saved every penny, that have paid off their mortgages, that have done everything they were supposed to do, and they were going to retire with their beautiful nest egg, and they were going to get interest on their money, and now they're getting one-eighth of 1%. I think that's unfair to those people, who have led their lives in the way they were supposed to.Then, expanding further, he also pointed out that high rates are bad:What's a scary prospect is if you start raising rates and you have to borrow money as a country, and if the rates, instead of where they are now, the rates are substantially higher, where the rates are 3% and 4%, or whatever it may end up being. That is a very scary prospect for this country. When you start adding that kind of number to an already reasonably crippled economy, certainly in terms of what we produce, that number is a very scary number for a lot of people to be looking at.None of Trump's statements, technically, are contradictory. They boil down to a banal observation: Low interest rates are good for borrowers and bad for savers.Seeing Trump talk about monetary policy reminds me of a time when, because of breaking news, I had to discuss football on national television, despite my lack of expertise on the subject. What, I was asked, would <a href="http://www.businessinsider.com/report-tom-brady-will-be-suspended-for-deflategate-2015-5">Tom Brady's Deflategate suspension</a> mean for other players in the NFL?Well, I replied, Tom Brady is a very good quarterback. So, his suspension would be bad for the New England Patriots and good for players on other teams. You can fault my answer for its depth, but you cannot fault it for accuracy.The main difference between me and Donald Trump is that I am not seeking the job of NFL commissioner.Still, I have an idea about how Trump can turn his banal observation about the interest-rate trade-off into a concrete policy proposal. Why not a policy of low rates for borrowers and high rates for savers?In most areas of policy, Trump is unconstrained by the trade-offs that bind mortal politicians. He is the candidate of <a href="http://www.businessinsider.com/donald-trump-h1b-visas-gop-debate-immigration-2016-3">more and less high-skill immigration</a>, of huge tax cuts but no changes to Social Security and Medicare because he'll "make us so rich" that that won't be necessary, of a border wall that somebody else pays for.If we can have all of those things, then why can't we have high and low rates at the same time? President Trump, please make interest rates great again, for borrowers and savers alike. <div class="margin-top"> <h3>NOW WATCH: <a href="http://www.businessinsider.com/corey-lewandowski-trump-campaign-manager-assault-michelle-fields-2016-4">Reports say a Florida prosecutor will not press charges against Donald Trump's campaign manager</a></h3> <div> <div> <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="UzOTd0MjE6Rf4-ZenPL7fPqhRSghIWwc" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div> </div> </div> </div>

Donald Trump likes low interest rates - and high interest rates

<ul class="summary-list"><li>High interest rates actually might be helping US consumers, Carson Group strategist Ryan Detrick said.</li><li>While interest payments for Americans have jumped, they've been offset by a jump in interest income in money market accounts.</li></ul>Soaring interest rates have hit US consumers hard. <a href="https://www.businessinsider.com/how-do-interest-rate-hikes-impact-housing-market-rent-mortgages-2024-3">Mortgage rates</a> are at multi-decade highs and <a href="https://www.businessinsider.com/credit-card-debt-interest-rates-consolidation-economy-recession-soft-landing-2024-2#:~:text=According%20to%20the%20Fed%2C%20more,years%20ago%20and%20still%20rising.&amp;text=According%20to%20Ginger%20Chambless%2C%20the,mortgage%20delinquencies%20to%20credit%20cards.">credit card delinquencies</a> are on the rise.But there's another side of that story that warrants more attention, involving money-market funds, a Carson Group strategist said. "I want to take the other side of higher rates and that is savers are finally being rewarded," Ryan Detrick, chief market strategist, wrote in a <a href="https://www.carsongroup.com/insights/blog/why-high-interest-rates-havent-hurt-the-consumer-and-maybe-even-helped/" target="_blank" rel="noopener">blog post</a>. "It is estimated there is more than $6 trillion in money markets currently and most of those accounts are earning close to 5%. That right there is a plus side to higher rates."That doesn't mean consumers aren't feeling any pain at all. Interest payments have surged as Americans simply pay more for any amount they borrow (an annual rate of about $573.4 billion today versus $241.5 billion three years ago).But high interest rates do mean that savers are seeing higher rates of return. For those US consumers who do have cash, they are being rewarded "like no time over the past few decades," Detrick said.By the numbers, US personal interest income has jumped to an annual rate of $1.83 trillion last month as opposed to $1.5 trillion three years ago. Which boils down to one key takeaway, Detrick said: the jump in interest payments were virtually offset by the jump in interest income.Detrick also cited data from Ritholtz Wealth Management that shows household assets have grown more than household liabilities since 2020. Which again pushes back against the idea that consumers are being walloped by high interest rates, <a href="https://www.businessinsider.com/us-economy-credit-card-debt-yolo-consumer-spending-recession-rosenberg-2024-2">drowning in debt.</a>That being said, it's a sunny story for a specific type of US consumer."We are aware this isn't an ideal backdrop for everyone, as many are struggling," Detrick said. "But the truth is if you've owed stocks and a house the past decade or more, are college educated, and willing to work hard, then your net wealth is likely near all-time highs and these are the people who likely move the needle on the economy."

Why high interest rates actually might be helping US consumers, strategist says

<ul class="summary-list"><li>The Federal Reserve Bank forecast three rate cuts in 2024.</li><li>Rent prices soared in 2023, potentially forcing the Fed to maintain higher rates.</li></ul>There are growing concerns that the Federal Reserve Bank will not <a target="_blank" href="https://www.businessinsider.com/fed-first-rate-cut-forecast-us-economy-high-interest-impact-2024-2">lower interest rates</a> this year and one of the biggest factors could be how much <a target="_blank" href="https://markets.businessinsider.com/news/commodities/housing-market-average-rent-charts-affordability-zillow-real-estate-property-2023-10">Americans are paying for rent</a>.In early February, <a target="_blank" href="https://www.businessinsider.com/powell-60-minutes-interview-fed-interest-rate-cuts-before-election-2024-2">Fed Chairman Jerome Powell</a> stood by the bank's earlier forecast of three interest rate cuts in 2024. But rent, one of the biggest costs for Americans, still <a target="_blank" href="https://markets.businessinsider.com/news/commodities/rent-prices-all-time-high-us-housing-market-mortgage-rates-2023-9">soared in 2023</a> and that factor could force the Fed to keep rates higher for longer than expected.John Rekenthaler, the vice president for research at Morningstar, pointed out in a <a target="_blank" class="" href="https://affiliate.insider.com?h=c07043a061bebd8e682bc2c343c51176791cf033b467173dfdf4830be52205f1&amp;postID=65e7466833d9389aad41a273&amp;postSlug=interest-rate-cuts-federal-reserve-bank-when-rent-costs-housing-2024-3&amp;site=bi&amp;u=https%3A%2F%2Fwww.morningstar.com%2Feconomy%2Fhow-read-cpi-report">February report</a> that while inflation had cooled in many important sectors — <a target="_blank" href="https://www.businessinsider.com/prices-inflation-rate-rise-drop-deflation-food-oil-car-prices-2024-1">such as cars and appliances</a> — it has heated up for rent at a time when economists had predicted it would finally start dropping."It's one thing to shrug off housing inflation in the summer of 2022 when the Fed had barely begun to raise interest rates," Rekenthaler wrote in the report. "It's quite another to do it 18 months later when those rent prices that were supposed to be coming down are not showing up in the data."<div type="image" title="The monthly change in shelter cost inflation." height="575" width="844" msid="108269731" hostid="261" sizebytes="12996"></div>The month-to-month change in <a target="_blank" href="https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-and-rent.htm">shelter costs</a> in January, which consists of rent or the equivalent cost to rent an owned home, matched the 0.6% increase seen in September when <a target="_blank" href="https://markets.businessinsider.com/news/commodities/rent-prices-all-time-high-us-housing-market-mortgage-rates-2023-9">rent prices</a> approached their all-time high.Rekenthaler called shelter costs the "most relevant data point" in the most recent consumer price index inflation report. He noted that the Fed won't be able to lower rates with confidence that the earlier rate hikes have helped until they know for certain that shelter costs have peaked.Meanwhile, James Bianco, president of Bianco Research, a financial markets research firm, told Business Insider, "Rising shelter costs will cause the Fed to hold off on cutting rates."<div type="image" title="US Federal Reserve Board Chairman Jerome Powell speaks during a news conference at the headquarters of the Federal Reserve on January 31, 2024 in Washington, DC." height="2731" width="4096" msid="108269733" hostid="261" sizebytes="381236"></div>Rent and shelter costs tend to lag behind the rest of the economy because rents are typically fixed for long periods. Even though more than half of Americans <a target="_blank" href="https://www.census.gov/library/stories/2023/07/younger-householders-drove-rebound-in-homeownership.html#:~:text=Homeownership%20Increased%20Among%20All%20Racial%2FEthnic%20Groups&amp;text=But%20from%202019%20to%202022,2016%20to%2074.4%25%20in%202022.">own their home</a>, as recently as August, shelter costs still represented about <a target="_blank" href="https://www.cnn.com/2023/08/10/homes/forecast-shelter-inflation/index.html">90% of total inflation</a>, and that was before the recent spike in month-to-month inflation for shelter costs.Kevin Gordon, a senior investment strategist at <a target="_blank" href="https://www.schwab.com/learn/author/kevin-gordon">Charles Schwab</a>, told Business Insider that he believes shelter costs are still secondary to other issues, such as weakness in the labor market, when determining when and how aggressive the Fed will be with rate cuts. He also noted that some factors in determining rent prices, such as housing supply, are out of the Fed's control.However, Gordon also said shelter costs can't be ignored because of how much it impacts overall inflation."It's hard to say that the stickiness in rents is directly influencing the Fed's decision to cut rates, but I think it will indirectly play a role — mostly because the shelter components still make up a considerable portion of core inflation," Gordon said.In January, the CPI rose 3.1%, above the projected rate of 2.9%. Now, not only are some experts worried that <a target="_blank" href="https://www.businessinsider.com/fed-first-rate-cut-forecast-us-economy-high-interest-impact-2024-2">rates won't be cut in 2024</a>, but the chances of the <a target="_blank" href="https://www.businessinsider.com/economic-outlook-fed-interest-rate-hikes-cuts-larry-summers-recession-2024-2">Fed actually raising rates again</a> are starting to grow.Despite sticky inflation, <a target="_blank" href="https://www.businessinsider.com/prices-inflation-rate-rise-drop-deflation-food-oil-car-prices-2024-1">some things have gotten cheaper</a> in the past year, raising hopes of a soft landing for the economy. But while <a target="_blank" href="https://markets.businessinsider.com/news/etf/consumer-sentiment-hits-31-month-high-in-february-inflation-expectations-edge-higher-1033076668">consumer confidence</a> is growing, some <a target="_blank" href="https://markets.businessinsider.com/news/commodities/housing-market-average-rent-charts-affordability-zillow-real-estate-property-2023-10">rent is not getting cheaper</a> for many Americans and could have a huge impact on what the Fed does in 2024.

The one big thing keeping interest rates high

<ul class="summary-list"><li>Bitcoin is barreling back toward its all-time high of $69,000.</li><li>The last time the crypto reached current levels, interest rates were near zero.</li></ul>Bitcoin is in a prolonged rebound to levels last seen when interest rates were near zero and <a href="https://markets.businessinsider.com/news/currencies/nft-market-crypto-digital-assets-investors-messari-mainnet-currency-tokens-2023-9">pixelated artwork was regularly selling for millions</a>.On Monday, bitcoin spiked by more than 5% to breach $66,000 for the first time in nearly three years. It's within reach of its all-time high of $69,000. Ether, solana, dogecoin, and other tokens are also staging rallies. In February, the value of the cryptocurrency market <a href="https://markets.businessinsider.com/news/currencies/bitcoin-price-outlook-crypto-market-cap-trillion-eth-investors-etf-2024-2">returned to $2 trillion</a> for the first time since April 2022.This retesting of highs comes against the headwinds of interest rates potentially remaining higher for longer. Markets have pushed back their rate-cut forecasts as inflation persists and the economy shows little sign of weakening.The last time around, the rally was driven by low interest rates that encouraged speculative behavior. When the Federal Reserve started hiking rates to curtail high inflation, the momentum ran out, and bitcoin plunged to $16,000 less than a year after hitting records.Now cryptocurrencies are climbing with rates still elevated and without a clear path lower.What gives?"Even though Fed rate-cut expectations have been pushed back, the threat of rate hikes is off the table for now," Blue Chip Daily's chief technical strategist, Larry Tentarelli, told Business Insider, adding, "So <a href="https://markets.businessinsider.com/currencies/btc-usd">bitcoin</a> has been rallying."There's also a supply-demand imbalance that appears to be outweighing policy concerns.A slate of bitcoin-ETF approvals has fueled demand and retail interest, while markets are bracing for the bitcoin halving event that will lower the reward for miners and cut the volume issued daily in half.Halving happens once about every four years, with occurrences in 2020, 2016, and 2012. In the 12 months after the previous three halvings, bitcoin climbed by 8,069%, 284%, and 559%. The event puts pressure on supply as it slows the rate at which new bitcoins enter the market, and this year's halving will come at a time when demand is sharply rising.Tentarelli and other market pros have pointed to the emergence of bitcoin ETFs as a "tremendous" driver of crypto demand, as the products allow more investors to gain exposure without buying tokens outright.CoinShares data released Monday indicates that last week digital investment products saw the second-biggest weekly inflows on record, at $1.84 billion. Ninety-four percent of those inflows moved into bitcoin products. Trading volumes in the investment products hit a record of more than $30 billion in the same stretch.ETFs from the likes of Wall Street titans like BlackRock and Fidelity invest directly in bitcoin and are snapping up more and more of the available supply.A report from CoinDesk in February, the month after the ETF approvals, said the 11 funds owned 192,000 bitcoins. That figure is separate from the 420,000 owned by Grayscale, which converted its bitcoin trust into an ETF, and from the nearly 200,000 owned by MicroStrategy.<a href="https://markets.businessinsider.com/news/currencies/bitcoin-price-outlook-200000-2025-inflows-spot-etf-approval-sec-2024-1?utm_medium=ingest&amp;utm_source=markets&amp;utm_medium=ingest&amp;utm_source=markets">Standard Chartered</a> has predicted that ETF inflows could help push bitcoin's price to $200,000. Fundstrat's Tom Lee holds an even more bullish prediction, saying the crypto could reach <a href="https://markets.businessinsider.com/news/currencies/bitcoin-price-outlook-crypto-500000-price-target-etf-demand-boom-2024-1?utm_source=copy-link&amp;utm_medium=referral&amp;utm_content=topbar">$500,000</a>."There's a finite supply and now we have a potentially huge increase in demand" with spot bitcoin ETF approval, Lee said in a recent interview, "so I think in five years something around half a million would be potentially achievable."

Why crypto is surging back to all-time highs and shrugging off high interest rates

<ul class="summary-list"><li>Fears of a potential banking crisis are on the rise as interest rates stay elevated.</li><li>Interest rates are now at their highest levels since 2001 as the Fed keeps an eye on inflation.</li></ul>Fears of more trouble in the banking sector are on the rise as investors and economists worry that high interest are causing trouble for regional lenders. With interest rates at their highest levels since 2001, higher borrowing costs have put pressure on banks' balance sheets as borrowers struggle to pay debts or avoid the credit market altogether. According to Moody's Analytics chief economist Mark Zandi, the longer interest rates stay high, the more the Fed risks damaging the economy. "Those rates are corrosive on the economy. They wear the economy down, and at some point, something could break," the economist told Yahoo Finance in a recent interview, pointing to the series of bank failures that rocked markets in early 2023. "That's the kind of thing I'm worried about in the context of persistently high interest rates."High rates have started to impact credit conditions. Bank-financed loans and leases have stagnated over the last year, rising by $226 billion through 2023. That's a snail's pace compared to the prior year when banks tacked on $1.19 trillion in loans and leases. Commercial bank loans in late payment rose sharply over the fourth quarter, with the <a href="https://fred.stlouisfed.org/series/DRALACBN" target="_blank" rel="noopener">delinquency rate rising to 1.4%,</a> Fed data shows.Economists are particularly worried about the commercial real estate industry, with <a href="https://www.businessinsider.com/real-estate-outlook-offices-commercial-debt-downturn-recession-wall-street-2024-3">nearly a trillion of debt</a> in the sector set to mature by the end of this year. Those loans will likely have to be refinanced at higher rates, which could spark a wave of defaults and stress bank balance sheets. Real estate investor <a href="https://www.businessinsider.com/billionaire-barry-sternlicht-predicts-weekly-bank-closures-inflation-interest-rates-2024-5">Barry Sternlicht</a> said he foresees one bank failure a week if the Fed doesn't lower interest rates soon. "The 1.9 trillion of real estate loans, that's a fragile animal right now," Sternlicht said in a recent interview. The US has only seen one bank fail so far this year, according to <a href="https://www.fdic.gov/news/press-releases/fulton-bank-na-lancaster-pennsylvania-assumes-substantially-all-deposits" target="_blank" rel="noopener">FDIC</a> data. Regulators took over the Philadelphia-based Republic First Bank in April, before selling most of the deposits and assets to regional lender Fulton Bank. "You have dozens of small regional banks in America that are exposed to real estate, are writing off loans, and the higher for longer phenomenon is having a direct impact on this second tier of the banking sector in America," Daniel Pinto, CEO of Stanhope Capital said in an interview with <a href="https://www.youtube.com/watch?v=e267Op3Yg_g&amp;ab_channel=BloombergTelevision" target="_blank" rel="noopener">Bloomberg</a> this week. "The Fed will very much be aware that if they keep rates at this high level, they may have another banking crisis on their hands."

Investors and economists are getting worried about more bank failures as interest rates stay high

<ul class="summary-list"><li>Billionaire Barry Sternlicht is worried about America's regional and community banks.</li><li>Sternlicht told CNBC that banks may bear the consequences of the real estate crisis.</li></ul><a target="_blank" href="https://www.businessinsider.com/commercial-real-estate-crisis-crash-fed-economy-inflation-rates-sternlicht-2024-3">Billionaire Barry Sternlicht</a> offered an ominous prediction about America's regional banks amid a coming commercial real estate reckoning.The Starwood Capital Group CEO told <a target="_blank" href="https://www.youtube.com/watch?v=hdRvu0sI3zM">CNBC</a> on Tuesday that he thinks real estate's primary lenders — regional and community banks — could soon be bearing the brunt of high interest rates and inflation."You're going to see a regional bank fail every day, or not — every week, maybe two a week," Sternlicht said.There are more than 4,000 regional and community banks throughout the US, many of which may not have the cash flow to handle major loan losses on real estate debt.Problems have been pummeling the entirety of the real estate sector, but <a target="_blank" href="https://www.businessinsider.com/commercial-real-estate-big-trouble-crash-bank-crisis-2024-2">commercial real estate, in particular, has been struggling</a> due to the rise of remote and hybrid work, leading to more and more vacancies.Sternlicht has been <a target="_blank" href="https://www.businessinsider.com/barry-sternlicht-recession-us-economy-outlook-real-estate-storm-fed-2023-7">ringing the warning bells </a>for more than two years, calling the situation an "existential crisis" in a January Bloomberg interview. Earlier this year, he <a target="_blank" href="https://www.businessinsider.com/office-crash-property-values-commercial-real-estate-barry-sternlicht-economy-2024-1">predicted $1 trillion of losses on office properties alone.</a> In the Tuesday interview, Sternlicht said Fed Chair Jerome Powell's ongoing rate hikes will continue to have consequences in the real estate sector for the foreseeable future. "He's got a hard task with a blunt tool, and the consequence is the real estate markets are taking it on the chin because rates rose so fast. We could have handled this, but we couldn't handle it this fast," Sternlicht said. "The 1.9 trillion of real estate loans, that's a fragile animal right now."Only one regional bank has shuttered since the start of 2024. Last month, the Federal Deposit Insurance Corporation seized $4 billion in deposits and $6 billion in assets from Republic First Bank, a regional lender operating in the Northeast with significant commercial real estate holdings.Others have echoed Sternlicht's warnings. Scott Rechler, RXR CEO, made a similar prediction earlier this year, saying he thinks there will be <a target="_blank" href="https://www.businessinsider.com/real-estate-ceo-scott-rechler-regional-banks-commercial-real-estate-2023-3">500 fewer banks in the US by 2026</a> as many commercial real estate loans start to mature."Community banks are important to our fabric," Sternlicht told CNBC on Tuesday.

Billionaire Barry Sternlicht predicts weekly bank closures as the real estate sector battles high interest rates and inflation

<ul class="summary-list"><li>US housing affordability is the lowest it's been in over three decades.</li><li>Insider asked five housing experts what advice they have for eager first-time homebuyers.</li></ul>The average 30-year fixed mortgage rate <a target="_blank" href="https://markets.businessinsider.com/news/etf/30-year-mortgage-rates-skyrocket-to-8-highest-in-over-2-decades-amid-treasury-turmoil-1032718244">hit 8% this week</a>, the highest level since 2000.High borrowing costs are among the reasons <a target="_blank" href="https://www.businessinsider.com/baby-boomers-are-happy-interest-rates-home-prices-2023-9">US mortgage affordability</a> is at the lowest level since at least 1989, per the National Association of Realtors. For the housing market to return to pre-pandemic levels of affordability, <a target="_blank" href="https://markets.businessinsider.com/news/commodities/housing-market-affordable-income-expensive-black-knight-mortgage-rates-fed-2023-10">US incomes would have to spike 55%</a>, Andy Walden, vice president of enterprise research at ICE Mortgage Technology, told CNBC last week.These developments have created huge obstacles for aspiring homeowners. First-time buyers accounted for just <a target="_blank" href="https://www.businessinsider.com/baby-boomers-are-happy-interest-rates-home-prices-2023-9">26% of US home purchases last year</a>, per the NAR, the lowest share since data collection began in 1981.Many Americans have been left wondering when — if ever — the time will be right for them to enter the housing market.<a target="_blank" href="https://www.businessinsider.com/interest-rates-mortgage-loan-when-will-federal-reserve-cut-2023-9">Falling interest rates</a>, <a target="_blank" href="https://markets.businessinsider.com/news/stocks/us-housing-market-outlook-home-prices-zillow-inventory-shortage-demand-2023-10">price cuts to homes</a>, and <a target="_blank" href="https://markets.businessinsider.com/news/stocks/us-housing-market-homebuyers-home-prices-inventory-sellers-asking-rates-2023-9">new home construction</a> could provide homebuyers some relief over the next year, but the future of those variables remains uncertain.Insider asked five housing experts what they expect from the housing market over the next 12 to 18 months — and what key pieces of advice they have for aspiring homebuyers.<h2>Waiting for interest rates to fall could backfire</h2><div type="image" title="Jerome Powell" height="3740" width="5611" msid="104627254" hostid="261" sizebytes="412132"></div>Daryl Fairweather, Redfin's chief economist, told Insider that she expects the Federal Reserve to <a target="_blank" href="https://www.businessinsider.com/fed-u-turn-rate-cuts-yearend-recession-jpmorgan-asset-cio-2023-9">lower interest rates</a> in the second half of 2024, a development that would likely <a target="_blank" href="https://www.businessinsider.com/personal-finance/how-does-fed-impact-mortgage-rates">lead to modestly lower mortgage rates</a>.But she said waiting for rates to fall before entering the housing market could be a mistake."The second that happens, buyers will rush back into the market and we will see a return of bidding wars," she said.For homebuyers who are financially prepared to buy a home, locking in a high interest rate now — and <a target="_blank" href="https://www.businessinsider.com/personal-finance/when-to-refinance-mortgage">refinancing at a lower rate</a> down the road — could be a wise move, Lawrence Yun, chief economist at the National Association of Realtors, told Insider."Many homeowners first bought their home when interest rates were high — the 50-year average rate on a mortgage is 7.8%," he said. "One can always refinance into lower rates when the interest rate environment improves."Even if cuts to <a target="_blank" href="https://www.businessinsider.com/interest-rates-mortgage-loan-when-will-federal-reserve-cut-2023-9">interest rates</a> cause mortgage rates to fall, they're unlikely to return to the <a target="_blank" href="https://www.businessinsider.com/fed-rate-cuts-hikes-sticky-inflation-mortgage-home-prices-rent-2023-7">near-zero levels</a> they were in 2022.Over the next 12 to 18 months, Yun expects mortgage rates to fall from the near-8% they're at now to below 7%, perhaps even close to 6%, he said.Dr. Selma Hepp, chief economist at the real estate data provider CoreLogic, agreed."Mortgage rates are expected to remain around 6% at the end of 2024," she said.<h2>If you plan to stay in the home for several years, homeownership could be a good bet</h2><div type="image" title="couple buying a home" height="3503" width="5200" msid="104627255" hostid="261" sizebytes="1618124"></div>David Meyer, vice president of data and analytics at the real estate investing platform BiggerPockets, told Insider that as long as you're able to be patient, <a target="_blank" href="https://www.businessinsider.com/americans-purchasing-homes-housing-good-real-estate-investment-2022-8">homeownership tends to be a good investment</a>."The best time to buy a home is when you find a house you want to stay in for a long time, and you can comfortably afford it," he said. "Buying real estate is very forgiving if you plan to hold onto it for a long time."Redfin's Fairweather agreed."The most important thing is to find a home that you would want to stay in for five or more years," she said. "If you stay in that home for the long run it will go up in value."However, continuing to rent may prove to be the <a target="_blank" href="https://www.businessinsider.com/better-to-rent-buy-house-yale-economist-real-estate-investment-2022-11">better financial decision</a> for some Americans. While home values have <a target="_blank" href="https://www.businessinsider.com/wealth-created-by-the-housing-boom-is-driving-economic-inequality-2022-5">historically appreciated</a> over time and helped many Americans grow their wealth, Fairweather said buyers should only lock down a home they can comfortably afford with their monthly mortgage payment."You always want to have space in your budget so you can save for emergency expenses," she said.<h2>There's never a perfect time to buy a home</h2><div type="image" title="A man mowing the lawn in front of a house." height="1667" width="2500" msid="104627256" hostid="261" sizebytes="929766"></div>It's impossible to know when the average US homebuyer will be best positioned to enter the housing market.A <a target="_blank" href="https://www.businessinsider.com/economic-inequality-housing-shortage-causes-2023-1">shortage of housing construction across the US</a> is among the factors keeping home prices elevated. While there's been an <a target="_blank" href="https://www.businessinsider.com/house-construction-building-boom-last-hope-new-homebuyers-housing-market-2023-7">uptick in home building</a>, Jenna Stauffer, a Sotheby's International Realty associate, said that it's unlikely to have a significant near-term impact on affordability."We're facing a significant underbuilding issue so even with new construction projects underway, it will be a considerable amount of time before we can bridge the gap," she said.Improving one's credit score, broadening one's search to <a target="_blank" href="https://www.businessinsider.com/cheapest-cities-most-affordable-place-to-live-best-home-price-2023-9">less expensive markets</a>, and actively monitoring new housing inventory could be helpful for prospective homebuyers, the housing experts Insider interviewed said."Timing the market is very difficult particularly given expectations of higher mortgage rates for longer and continued home price appreciation," Hepp said.If and when mortgage rates fall, Yun said that some homeowners who have been eager to move — but have been <a target="_blank" href="https://markets.businessinsider.com/news/commodities/housing-market-outlook-mortgage-rates-homeowners-investors-real-estate-property-2023-8">reluctant to give up their low interest rates</a> — will likely decide to sell. This could help boost the housing supply on the market and provide some price relief."Some homeowners will give up their 3% locked-in low rates for a better home even if there is some cost involved in taking on higher mortgage rate of say 6%," he said.But on the other hand, lower rates could also result in "increased competition and less negotiating power" as more buyers enter the market, Meyer said."There's never a perfect time to buy."

3 reasons it could be the right time to buy a home, despite high interest rates

<ul class="summary-list"><li>High home prices and interest rates have created many challenges for young Americans.</li><li>But the boomer generation has fewer reasons to complain.</li></ul>Buying a home in the US is <a target="_blank" href="https://markets.businessinsider.com/news/stocks/housing-market-unaffordable-mortgage-rates-home-prices-inventory-2008-crisis-2023-8">less affordable</a> than it's been in decades, but many older Americans are benefiting from the economic environment.According to the National Association of Realtors, US <a target="_blank" href="https://www.bloomberg.com/news/articles/2023-09-18/biden-2024-campaign-faces-risk-in-swing-states-with-dwindling-home-affordability">mortgage affordability</a> is at the lowest level since at least 1989. As of June, the median American had to spend over 43% of their income to meet a <a target="_blank" href="https://markets.businessinsider.com/news/commodities/housing-affordability-crisis-shortage-inventory-high-mortgage-rates-middle-class-2023-6">mortgage payment</a> on the typical US home, according to the <a target="_blank" href="https://www.atlantafed.org/center-for-housing-and-policy/data-and-tools/home-ownership-affordability-monitor">Atlanta Fed</a>, the third-highest monthly figure since 2006.These trends have been driven by the combination of high home prices and interest rates. This month, the median US monthly mortgage payment hit a <a target="_blank" href="https://markets.businessinsider.com/news/stocks/housing-market-mortgage-payments-record-high-home-prices-inventory-shortage-2023-9">record high of over $2,600</a>. In the second quarter of this year, over half of the US housing market saw <a target="_blank" href="https://markets.businessinsider.com/news/commodities/home-prices-us-housing-market-unaffordable-record-increase-mortgage-rates-2023-8">record price increases</a>. At the same time, the 30-year fixed mortgage rate is <a target="_blank" href="https://markets.businessinsider.com/news/stocks/housing-market-mortgage-payments-record-high-home-prices-inventory-shortage-2023-9">near a two-decade high</a>, in part due to the Federal Reserve's campaign to raise interest rates and cool inflation.If you're a young, aspiring first-time homebuyer, these developments may sound dismal. But if you're a member of the <a target="_blank" href="https://www.businessinsider.com/gen-z-millennial-boomer-gen-x-why-generations-feud-2023-7">baby-boom generation</a>, the youngest members being about 60 years old, there's a good chance you have fewer complaints about high home prices and interest rates.Of course, many <a target="_blank" href="https://www.businessinsider.com/young-late-baby-boomers-homeless-rent-social-security-2023-9">older Americans</a> are also struggling in <a target="_blank" href="https://www.businessinsider.com/millions-boomers-retirement-no-savings-survey-2023-4">today's economy</a>, but high prices and rates are generally more advantageous to them than to younger generations. Insider breaks down the reasons below.<h2>Rising home prices increase the wealth of existing homeowners</h2>For the <a target="_blank" href="https://www.federalreserve.gov/publications/2022-economic-well-being-of-us-households-in-2021-housing.htm">roughly 70%</a> of US 18- to 29-year-olds who didn't own a home as of 2021, per the Federal Reserve, high prices might've made homeownership feel unattainable. First-time buyers accounted for just <a target="_blank" href="https://www.nar.realtor/research-and-statistics/research-reports/highlights-from-the-profile-of-home-buyers-and-sellers">26% of US home purchases</a> last year, according to the National Association of Realtors, the lowest share since data collection began in 1981. By pushing up the number of renters, high home prices help keep young Americans' <a target="_blank" href="https://markets.businessinsider.com/news/commodities/rent-prices-all-time-high-us-housing-market-mortgage-rates-2023-9">rent prices high</a>.For many older Americans, however, high home prices have been a boon to their finances.As of 2021, <a target="_blank" href="https://www.federalreserve.gov/publications/2022-economic-well-being-of-us-households-in-2021-housing.htm">84% of Americans</a> ages 60 and older owned their home. The rise in <a target="_blank" href="https://fred.stlouisfed.org/series/MSPUS">housing prices</a> over the past few decades — and especially the past few years — has helped boomers accumulate <a target="_blank" href="https://www.businessinsider.com/boomers-worsening-americas-pandemic-housing-crisis-real-estate-millennials-2021-7">more real-estate wealth</a> than any other generation, a New York Time analysis of Fed data found.As of the first quarter of this year, boomers held about 53% of <a target="_blank" href="https://www.federalreserve.gov/releases/z1/dataviz/dfa/distribute/chart/#quarter:134;series:Net%20worth;demographic:generation;population:all;units:levels">total US household wealth</a>, the Fed said. While <a target="_blank" href="https://www.businessinsider.com/more-millennials-own-their-own-home-gen-z-still-renting-2023-4">many Gen Xers and millennials</a> have bought homes over the past decade, they held only 28% and 6%, respectively — partly because they haven't had as much time to see their home values grow.<h2>Rising interest rates affect you less if you've already been locked in a loan payment</h2>Boomers historically faced significant <a target="_blank" href="https://markets.businessinsider.com/news/commodities/housing-unaffordable-baby-boomers-millennials-mortgage-rates-home-prices-income-2023-7">housing-affordability challenges</a> of their own, but many were able to refinance at lower rates over the years. And with their fixed mortgage rates now <a target="_blank" href="https://markets.businessinsider.com/news/commodities/housing-market-mortgage-rates-low-inventory-listings-homes-for-sale-2023-6">locked in</a>, the recent spike isn't a problem for those still paying off their mortgages.For young Americans, there's not a whole lot to like about high interest rates.Elevated rates not only <a target="_blank" href="https://www.businessinsider.com/personal-finance/how-does-fed-impact-mortgage-rates">contribute to</a> the high mortgage rates that have helped make homeownership so expensive but also make <a target="_blank" href="https://www.businessinsider.com/paying-bills-credit-card-debt-student-loans-2023-8">credit-card debt</a> all the more costly. Americans could pay an extra <a target="_blank" href="https://www.businessinsider.com/personal-finance/interest-rates-raised-cost-credit-card-debt-2023-3">$45 billion</a> in credit-card interest this year because of the increase in rates alone.Students who took out federal student loans this fall were strapped with the highest interest rates in <a target="_blank" href="https://www.nerdwallet.com/article/loans/student-loans/student-loan-interest-rates">at least a decade</a>. Those with variable-rate student loans from <a target="_blank" href="https://www.bankrate.com/loans/student-loans/how-fed-impacts-student-loans/">private lenders</a> could see their borrowing costs rise as well.Meanwhile, the average monthly car payment in the US reached a <a target="_blank" href="https://www.businessinsider.com/car-loan-vehicle-shoppers-denied-what-to-do-2023-7">record high of $733</a> in the second quarter of this year, driven in part by elevated interest rates.Older Americans <a target="_blank" href="https://www.businessinsider.com/young-late-baby-boomers-homeless-rent-social-security-2023-9">aren't immune</a> to credit-card debt, but few are taking out student loans at this point in their lives. While some are purchasing new vehicles, many locked in a <a target="_blank" href="https://www.statista.com/statistics/290673/auto-loan-rates-usa/">lower car payment</a> years ago.<h2>High interest rates boost low-risk investments for retired boomers</h2>One of the most common pieces of <a target="_blank" href="https://www.investopedia.com/ask/answers/041515/treasury-bond-good-investment-retirement.asp">investing advice</a> for older Americans and retirees is to shift at least some savings away from lucrative but risky investments in the volatile stock market into more-stable but typically <a target="_blank" href="https://www.businessinsider.com/personal-finance/treasury-bonds">lower-yielding bonds</a>.Generally, investors are forced to accept a much <a target="_blank" href="https://www.businessinsider.com/personal-finance/how-to-buy-treasury-bonds">lower return</a> in exchange for bonds' lower risk, but in today's high-interest environment, many boomers have been able to have something close to the best of both worlds.On Wednesday, yields on US government Treasury bonds reached the <a target="_blank" href="https://markets.businessinsider.com/news/bonds/treasury-yields-jump-us-debt-hits-record-33-trillion-2023-9">highest level since 2007</a>. The rate of 10-year Treasurys was about <a target="_blank" href="https://markets.businessinsider.com/bonds?utm_medium=ingest&amp;utm_source=markets">4.36%</a>, up from a low of 0.32% in early 2020.For younger investors eager to ride the stock-market roller coaster and grow their wealth over time, bonds are less attractive. Elevated interest rates, however, are weighing on the stock market because high Treasury bond yields have made investors less likely to <a target="_blank" href="https://www.businessinsider.com/stock-market-crash-recession-rising-interest-rates-10year-yield-sp500-2023-8">dump money into stocks</a>.In the near term, US home prices are likely to <a target="_blank" href="https://markets.businessinsider.com/news/commodities/housing-market-home-prices-frozen-mortgage-rates-interest-affordability-fed-2023-5">continue frustrating</a> young Americans and boosting the net worths of many boomers. High interest rates, meanwhile, are expected to persist, though experts say the Fed could <a target="_blank" href="https://www.businessinsider.com/interest-rates-mortgage-loan-when-will-federal-reserve-cut-2023-9">begin cutting rates next year</a>.

You may hate high interest rates and home prices, but many boomers have reason to celebrate

<ul class="summary-list"><li>Constant volatility will be a hallmark of the new market regime, BlackRock strategists said.</li><li>High interest rates will amplify the US's debt problem, which has already stoked volatility in markets. </li></ul>The new market regime will be marked by constant volatility, BlackRock strategists wrote in a note, as higher-for-longer interest rates will exacerbate the issues with America's massive debt pile. "We see volatility as a constant in the new regime," the world's largest asset manager said in a note on Monday, pointing to the rise in interest rates over the past year. Central bankers have hiked interest rates aggressively to control inflation, with fed funds rate now at its highest level since 2001.And rates are likely to stay elevated, despite expectations from some investors for rate cuts on the horizon, the note warned. That's partly because the Fed's rapid interest rate hikes over the past year have pushed down US growth, meaning higher rates are now required to keep inflation in check."Markets appear to miss this bigger picture, and we see more volatility ahead as they swing between hopes for a 'soft landing' and fears about higher rates and recession," strategists warned.Higher rates also spell trouble for the US debt picture, especially as the government's total debt balance edges closer to $34 trillion.That rapid pace of spending has worried economists for years, but the debt could soon be reaching a breaking point, commentators warn, as higher interest rates have dramatically pushed up borrowing costs. The US's <a href="https://markets.businessinsider.com/news/bonds/us-debt-interest-payments-federal-deficit-treasury-bonds-fed-hikes-2023-11">annualized interest expenses on its debt balance hit $1 trillion</a> over the last quarter, according to a Bloomberg analysis.And if interest rates stay close to 5%, the US could soon spend more on annual debt service than it spends funding Medicare in just a few years, BlackRock said.Fears over the US debt picture have already stoked volatility in markets in recent weeks. The <a href="https://markets.businessinsider.com/index/vix">Cboe Volatility Index</a> surpassed a closely watched threshold of 20 in October, partly due to debt fears pushing US bond yields higher. <a href="https://markets.businessinsider.com/news/bonds/treasury-yields-jump-us-debt-hits-record-33-trillion-2023-9">The yield on the 10-year US Treasury also briefly surpassed 5% last month</a>, the highest level in 16 years. BlackRock has warned previously of a <a href="https://markets.businessinsider.com/news/stocks/stock-market-outlook-sp500-earnings-us-economy-inflation-growth-blackrock-2023-10">tough regime ahead for markets</a>, as the era of easy money and ample liquidity fades. Instead, strategists see inflation headed for a rollercoaster ride and warned last month that markets have yet to price in some of the <a href="https://markets.businessinsider.com/news/stocks/stock-market-outlook-sp500-earnings-us-economy-inflation-growth-blackrock-2023-10">damage to the macro picture</a>.

Brace for constant volatility as high interest rates amplify the US debt problem, BlackRock says

<ul class="summary-list"><li>It's never been harder to build wealth in modern times, experts tell Business Insider.</li><li>That's largely because it's become much harder to buy a home, the "big ticket" to wealth for most Americans.</li></ul>Never in modern times has it been harder to build wealth. That's partly thanks to <a href="https://markets.businessinsider.com/news/stocks/millennials-vs-baby-boomers-wealth-transfer-mortgage-interest-rates-housing-2023-10">sky-high interest rates</a> in the economy, which have spiked borrowing costs and pushed home ownership out of reach for many Americans.An inaccessible housing market spells trouble for those looking to build up their nest eggs, according to BankRate senior industry analyst Ted Rossman. Over the last 10 years, the median US home has appreciated 58% in value, according to Federal Reserve data.That's not quite as good as, say, investing in the S&amp;P 500. The benchmark stock index has appreciated 152% over the past ten years – but real estate is still critical part of becoming wealthy, Rossman said, since most Americans have their net worth tied up in a home.And now, given the high barriers to the housing market, he estimated it could be the worst time to grow your wealth since the start of the modern era, which he defines as the end of World War II."It's harder than ever to buy a home. And homeownership is often the ticket to wealth for a lot of people," Rossman told Business Insider. "We know that people aren't always great about saving for a rainy day or saving for retirement."In 2022, US homeowners had a median net worth of $396,200 – nearly 40 times that of renters, whose median net worth measured around $10,400, Federal Reserve <a href="https://www.federalreserve.gov/publications/files/scf23.pdf" target="_blank" rel="noopener">data</a> shows.With ever-more Americans priced out of the housing market, that gap could grow wider. <a href="https://markets.businessinsider.com/news/commodities/housing-affordability-crisis-shortage-inventory-high-mortgage-rates-middle-class-2023-6#:~:text=Housing%20has%20become%20so%20unaffordable,expensive%20for%20middle%2Dincome%20buyers&amp;text=The%20housing%20affordability%20crisis%20has,for%20sale%20in%20the%20US.">Over 75% of homes on the market are now too expensive</a> for middle-class buyers, according to a June study from the National Association of Realtors and Realtor.com. <a href="https://markets.businessinsider.com/news/commodities/housing-market-home-sales-inventory-prices-mortgage-rates-affordability-crisis-2023-10">Home sales in September,</a> meanwhile, plummeted to their lowest level in 13 years, and consumer sentiment has similarly plunged. A record 85% of Americans <a href="https://www.fanniemae.com/research-and-insights/surveys-indices/national-housing-survey" target="_blank" rel="noopener">surveyed</a> by Fannie Mae last month said it's a bad time to buy a home.The struggle to build wealth — by way of the housing market or other means — has been reflected in the latest economic data. Since the start of the year, the top 0.1% of Americans have gained $1.3 trillion in wealth, while the bottom 50% have gained just $330 billion, per <a href="https://www.federalreserve.gov/releases/z1/dataviz/dfa/distribute/chart/">Fed data</a>.That gap is even worse than it was during the same time frame before the pandemic in 2019, when the top 0.1% gained $1.3 trillion over the first three quarters, and the bottom 50% gained $240 billion in wealth. <div type="image" title="The bottom 50% of Americans have earned less this year than they did in the same time frame in 2019, Fed data shows." height="800" width="1200" msid="105499679" hostid="261" sizebytes="27354"></div><h2>Rampant inequality</h2><a href="https://www.businessinsider.com/wealth-gap-rich-poor-americans-saps-economic-gdp-growth-billions-2022-5">America's wealth inequality problem</a> isn't new. The share of wealth belonging to the bottom 50% of Americans has stayed dismally low and has remained flat for decades, though it's recently been exacerbated by a handful of factors.Higher interest rates have raised borrowing costs on other types of debt in addition to mortgages, which have a greater impact on lower-income and poor Americans, according to Michael Neal, an equity scholar at the Urban Institute. The bottom 50% of Americans had around $6.1 trillion in debts but just $9.4 trillion in assets in the second quarter, Fed data shows, reflecting a debt ratio of 65%. Meanwhile, the top 0.1% had $150 billion in debts and $18.7 trillion in assets. "I think the degree to which tighter financial conditions limit access to wealth, it's going to disproportionately impact [the] low income," Neal said.Another problem is that <a href="https://www.businessinsider.com/us-wage-salary-growth-slowing-inflation-fed-interest-rate-hike-2023-2">hourly wage growth hasn't kept pace with inflation</a> until just recently. Wages grew 5.2% year-over-year in October – above the pace of inflation, which was 3.2% in the month. That's helping narrow the wealth gap, but it hasn't been enough to reverse the effects of sky-high inflation last year, when <a href="https://www.businessinsider.com/inflation-cpi-price-growth-june-2022-7">prices climbed 9.1% in the first half of 2022, hitting a 41-year-high.</a>"Only recently have we started to see wage gains outpacing inflation. We need more of that," Bankrate's Rossman said. "Especially for young adults getting established, key costs such as higher education, housing and childcare have been rising faster than wages for decades."Neither Rossman nor Neal see the wealth gap improving anytime soon. According to Rossman, inequality won't reverse unless wage growth continues to keep pace with inflation. But even that recent trend is a double-edged sword, since rising <a href="https://www.businessinsider.com/inflation-recession-us-economy-outlook-employment-fed-interest-rates-blackrock-2023-9">wages are themselves inflationary</a>."I think [wealth inequality] will probably continue to grow because I don't really see anything coming to disrupt that train," Rossman said. "It kind of feels like an object in motion says in motion, and I think it would be difficult to upend that."

It's never been harder to build wealth. Blame high interest rates and the US housing market.

<ul class="summary-list"><li>Lots of shoppers have car-buying on their mind as the end of the year approaches.</li><li>Experts say it's a better time to buy than last year, but there are still things to look out for.</li></ul>If you're in the market for a new or used vehicle before the end of the year or early 2023, industry experts have tips to get the car you want at a decent price.This time in 2021 was <a href="https://www.businessinsider.com/best-time-buy-car-tips-for-those-who-cant-wait-2021-12">a terrible time to buy a car</a>, but now the tides have turned a bit. <a href="https://www.businessinsider.com/chip-shortage-auto-industry-car-buying-dealerships-consumers-inventory-2022-12">Easing supply chain crises</a> mean more vehicles on lots, <a href="https://www.businessinsider.com/used-car-prices-falling-vehicle-dealerships-inflation-cooling-trucks-suvs-2022-9">used vehicle</a> prices are down, and demand is normalizing. That's left 57% of consumers either ready to buy or with a model in mind, according to a Cars.com survey.But there's a new ghost haunting this end-of-year buying season: <a href="https://www.businessinsider.com/used-car-prices-lowest-year-but-still-not-able-afford-2022-12">skyrocketing interest rates</a>, experts say."You're not having to compromise in every which way, shape and form," Ivan Drury, Edmunds' senior manager of insights, said. But, "Today's interest rates are so high that it has become cost prohibitive in a way we've never seen before."<h2>What you can do about sky-high interest rates</h2>Unfortunately, <a href="https://www.businessinsider.com/car-prices-interest-rates-used-new-vehicles-2022-11">the answer is: Not much</a>."There's really not a lot of ways to escape them unless you are willing to change the car that you're buying," Drury said. "On top of that, you're probably looking at monthly finance terms of 36 and 48 months versus what most people want to do, 5 to 6 years," he added. That'll likely lead to more people delaying their purchase. But the backlog of people who've already been putting off their vehicle purchase since early in the pandemic might have no choice but to shop right now, which will keep demand steady. Because of that, "I don't know when it'll let up for anybody until inventories for new cars get so high, the automakers decide to bite the bullet and just throw out incentives," Drury said. <h2>New cars are more expensive than ever </h2>The average new vehicle transaction price hit a record high of $48,681 in November, according to Edmunds, and luxury buyers were willing to pay up to $67,050. Drury still expects an end-of-year luxury push, but at a cost."BMW, Mercedes, Lexus, Audi — they don't really have finance deals anymore," Drury said. "That's just making these monthly payment numbers even more shocking."Even without the widespread inventory shortages that dealerships saw throughout the worst of the pandemic, <a href="https://www.businessinsider.com/affordable-used-cars-expensive-toyota-ford-honda-chevrolet-2022-10">car-buyers are still paying</a> above sticker price for non-luxury vehicles."If you look at the lower price ranges, really anything $50,000 and below — which is still not a small amount of money — there are still premiums," Drury said. "They're still seeing people pay $1,500 extra for just a basic sedan."<div type="image" title="A Toyota dealership in Florida." height="1666" width="2222" msid="96287597" hostid="261"></div><h2>What new cars to look for</h2>"If you're not buying a luxury car or an electric car, you may be in a much better position in terms of the price," Brian Moody, executive editor at Kelley Blue Book, told Insider. As far as luxury cars go, there aren't many deals to be found, he added. "Maybe looking for something that's off the beaten path, not a full-size pickup, not an SUV, not a minivan — maybe something like a sedan or a hatchback is a way to get the features that you want, but at a lower price," he said.<div type="image" title="Used cars dealer lot" height="1666" width="2222" msid="96287599" hostid="261"></div><h2>Plan to move quickly and consider used</h2>Vehicles are still moving quickly, Zack Krelle, industry analyst at TrueCar, said.He recommends doing your research on what model is best for you ahead of time. "Be as educated and prepared as you can ahead of time to kind of avoid those scenarios where you get excited about a vehicle and it turns out it's sold before you can arrive at the dealer to go see it," he said. Some brands are sitting on more inventory than others. Ford, Chevrolet, Ram, and Jeep had about 300,000 vehicles advertised for sale in early December, according to data from S&amp;P Global Mobility.Among luxury brands, Mercedes-Benz and Lincoln still showed the most remaining 2022 vehicles in dealer advertised inventory.Car-buyers might find a used vehicle could suit their needs while they hold out for lower prices surrounding new vehicles. "If you're looking for a new vehicle," Krelle said, "you might have an opportunity to find a used vehicle that could be a good fit for your budget and your lifestyle for a while."

Buying a car is finally easier &mdash; but watch out for high interest rates and lingering inventory issues

<ul><li>The <keyword id="30067" type="General" weightage="20" keywordseo="rbi" source="Orion">RBI</keyword> is likely to maintain status quo on policy rates for the fourth time in a row month, say experts.</li><li>This is in view of the stubbornly high retail <keyword id="22195" type="General" weightage="20" keywordseo="inflation" source="Orion">inflation</keyword>, elevated crude oil prices and more.</li><li>The <keyword id="6357126" type="General" weightage="20" keywordseo="monetary-policy" source="Orion">Monetary Policy</keyword> Committee (MPC) meeting is scheduled for October 4-6, 2023.</li></ul> The Reserve Bank is likely to maintain status quo on policy rates for the fourth time in a row at its bi-monthly monetary policy review meeting early next month, as retail inflation continues to remain high and the US Federal Reserve has decided to keep a hawkish stance for some more time, according to experts. The Reserve Bank had raised the benchmark repo rate to 6.5 per cent on February 8, 2023 and since then it has retained the rates at the same level in view of the stubbornly high retail inflation and certain global factors including elevated crude oil prices in the international market. The Reserve Bank Governor-headed six-member Monetary Policy Committee (MPC) meeting is scheduled for October 4-6, 2023. The last meeting of the MPC, the highest rating-setting panel, was in August. "We do expect the RBI to hold on to a status quo position this time as inflation is still high and liquidity tight. In fact, going by RBI forecast on inflation, it would be above 5 per cent in Q3 too, which will ensure that the status quo prevails for the calendar year for sure and probably Q4 too," said Madan Sabnavis, Chief Economist, Bank of Baroda. Sabnavis further said there are uncertainties relating to Kharif crop, especially on pulses, which can increase prices. "The comfort is that there is less concern on growth which is on target," he added. Although the <keyword id="134096" type="General" weightage="20" keywordseo="consumer-price-index" source="Orion">Consumer Price Index</keyword> (CPI)-based retail inflation eased a bit to 6.83 per cent in August from 7.44 per cent in the preceding month in July, it remained above the Reserve Bank's comfort level of 6 per cent. It may be mentioned that the government has mandated the RBI to keep inflation at 4 per cent with 2 per cent margin on either side. Aditi Nayar, Chief Economist, ICRA Limited said the headline CPI inflation is expected to ease to 5.3-5.5 per cent in September 2023 from 6.8 per cent in August 2023, benefitting from the halving of the average price of tomatoes as well as a favourable base. "... We expect the CPI inflation to ease to 5.6 per cent in Q3 FY2024 and further to 5.1 per cent in Q4 FY2024, amid upside risks to food inflation on account of the impact of uneven and sub-par monsoons and low reservoir levels on Kharif yields and Rabi sowing, respectively," she said. Nayar said ICRA expects the MPC to remain on hold in October 2023 policy, while continuing to demonstrate caution amid a cloudy outlook for food inflation and elevated crude oil prices. The Reserve Bank has projected CPI inflation at 5.4 per cent for 2023-24, with Q2 at 6.2 per cent, Q3 at 5.7 per cent and Q4 at 5.2 per cent, with risks evenly balanced. CPI inflation for Q1, 2024-25 is projected at 5.2 per cent. On his expectations from the next bi-monthly monetary policy, Sanjay Bhutani, Director, Medical Technology Association of India (MTaI) said the RBI has gone along with the market sentiment of retaining the benchmark interest rate at 6.5 per cent for quite some time now. However, it's time for the central bank to contemplate a reduction of the interest rate with the objective of boosting growth, he said. "...if that is not possible in view of high retail inflation and the hawkish stance of the Federal Reserve, the medical technology sector, which is reeling under the burden of high debt, does expect the RBI to continue with the pause and at the same time provide some firm indication of easing rates in the near future," Bhutani opined. Sandeep Bagla, CEO, Trust Mutual Fund was of the opinion that the environment for <keyword id="6371181" type="General" weightage="20" keywordseo="interest-rates" source="Orion">interest rates</keyword> has worsened considerably from MPC's last policy review in August. In the US and in India, the economy has shown resilient growth, and inflation numbers have risen beyond comfort levels. "While food prices have softened, crude oil prices have climbed up, thereby raising inflationary expectations as evidenced by sharp rise in US treasury yields. The MPC will consider all these factors and maintain status quo on repo rates, as headline inflation is expected to come down in the coming months," he said. The Reserve Bank mainly factors in the CPI-based inflation while arriving at its bi-monthly monetary policy. The borrowing cost which started rising in May last year has stabilised with RBI keeping the repo rate unchanged at 6.5 per cent since February, when it was raised from 6.25 per cent. Later in the next three bi-monthly policy reviews in April, June and August the benchmark rate was retained. The MPC consists of three external members and three officials of the RBI. The external members on the panel are Shashanka Bhide, Ashima Goyal, and Jayanth R Varma. Besides Governor Das, the other RBI officials in MPC are Rajiv Ranjan (Executive Director) and Michael Debabrata Patra (Deputy Governor).

As inflation continues to remain high, RBI likely to keep interest rates unchanged

<ul class="summary-list"><li>The Federal Reserve has not started cutting interest rates with inflation still north of 2%.</li><li>Yet companies haven't found it this easy to borrow cash since 2022, a Chicago Fed index shows.</li></ul>Companies haven't found it this easy to borrow in more than two years, according to one indicator, even though the Federal Reserve has opted to resist interest-rate cuts in a bid to curb inflation.The Chicago Fed's <a target="_blank" href="https://www.chicagofed.org/research/data/nfci/current-data">National Financial Conditions Index</a>, which measures companies' ability to access cash, fell to its lowest level since January 2022 earlier this month. A lower reading of the gauge signals a looser financial environment.The apparent easing in financial conditions comes despite the Fed's reluctance to slash interest rates, with <a target="_blank" href="https://www.businessinsider.com/inflation-cpi-food-energy-gas-prices-consumer-price-index-2024-5">inflation still running clear of its 2% target</a>.The central bank raised borrowing costs from near-zero to around 5.5% between March 2022 and July 2023 and has kept them at that level since. Last week, <a target="_blank" href="https://www.businessinsider.com/interest-rates-staying-higher-for-longer-no-cuts-powell-inflation-2024-5">Chair Jerome Powell</a> warned that rates will have to stay higher for longer to help ease price pressures."The first quarter in the United States was notable for its lack of further progress on inflation," he said during a panel in Amsterdam."We did not expect this to be a smooth road, but these were higher than I think anybody expected," Powell added. "What that has told us is that we'll need to be patient and let restrictive policy do its work."Soaring stock prices could be one factor driving the looser financial conditions highlighted by the Chicago Fed's gauge.The benchmark <a target="_blank" href="https://markets.businessinsider.com/futures/s&amp;p-500-futures">S&amp;P 500</a> stock-market index is up almost 12% this year and about 36% since the start of 2023, powered higher by AI and <a target="_blank" href="https://www.businessinsider.com/recession-outlook-economy-gdp-fourth-quarter-of-2023-2024-1">better-than-expected US growth</a>. That's happened despite the lack of rate cuts, which means investors could still park their cash in a savings account.Last week, BlackRock bond guru Rick Rieder warned that high rates might actually be stoking inflation, by <a target="_blank" href="https://www.businessinsider.com/us-inflation-outlook-fed-rate-cuts-blackrock-rick-rieder-2024-5">fueling a huge transfer of money from borrowers to lenders</a> and turning the private sector into a net creditor."I'm not certain that raising interest rates actually brings down inflation. In fact, I would lay out an argument that actually, if you cut interest rates, you bring down inflation," he told <a target="_blank" href="https://www.youtube.com/watch?v=syO6ilu-LIU">Bloomberg TV</a> on Friday.

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