Why Bankers Want Rate Hikes

It looks like the Fed in the US is going to raise rates. It is highly arguable whether it is a good idea. For a long time, it was a bad idea. Despite that, commercial banks recently have been arguing for the Fed to raise rates.  Now whatever reasons they have been given, the true and underlying reason is mentioned here:  Why Bankers Want Rate Hikes – The New York Times.

It is more difficult for banks to make money with lower rates. Higher rates make it easier for them to make money. Hence the push by some of them to raise the rates.

Banks aren’t stupid: they don’t want the economy to tank: they don’t make money that way either. But the sooner rates rise, the easier it is for them. Here’s hoping the US Fed continues to be smart enough to resist the pressure and do the right thing for the American economy.

 

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One response to “Why Bankers Want Rate Hikes

  1. smartpeopleiknow

    So the FED did raise rates. And now it looks like the US economy is taking a hit. See http://krugman.blogs.nytimes.com/2016/01/26/fed-fumble/?smid=tw-nytimeskrugman&smtyp=cur&_r=0 Will anyone from the FED suffer from this? Unlikely. Will everyone else suffer from this? Yes, practically everyone.

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