Taking Stock of Recent Interest Rate and Exchange Rate Trends
At the start of the year, everyone was only talking about rate cuts, but looking at recent data, things feel a lot more ambiguous now. Inflation seems to have been brought under control, but employment is holding up better than expected.
The exchange rate is another issue entirely... After all, when the exchange rate rises, import prices get pushed up, which keeps delaying the timing of any rate cut.
With experts' forecasts split roughly down the middle, I'm just planning to keep my deposit and savings maturities short and see how things play out.
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Agreed—waiting for a rate cut and having it keep getting pushed back is definitely exhausting lol
Got a source? Where did you see that metric number?
Well, that's a bit... isn't it less that employment is holding up and more just a statistical illusion? If you look only at the unemployment rate, it seems to be holding up, but if you look at the quality of re-employment or wage growth underneath, it's a completely different story. That's also why the Fed can't cut rates.
I’ve also been keeping my savings deposit maturities short since last year. Rolling them over every six months means I can follow rates up by re-depositing, and even if they fall, the loss isn’t big. That said, you need to check that the preferential rate conditions change often.
Me too.
When you look at exchange rates, checking the dollar index and the U.S. 10-year Treasury yield together gives you a better sense of the trend. If you only look at the exchange rate, you miss a lot.
If expert predictions are split down the middle, doesn’t that basically mean nobody knows? lol In that case, I guess the answer is just to keep doing what you were already doing.
Oh, I didn't know that.
The exchange rate wasn't so much what delayed the timing of rate cuts; it's just one of the variables. But the article makes it sound like the exchange rate determines everything, which feels a bit exaggerated. For import prices as well, energy prices are a bigger factor.
I see it the opposite way. Right now, I think it's better to park your money in a parking account and wait than to put it in fixed deposits or installment savings. You can take it out anytime and move it into stocks or bonds. Even if you keep the maturity short, when you consider the interest penalty for early withdrawal, parking is just more convenient. Of course, this is a matter of preference, and one thing is certain: there's no good reason to lock it up long-term right now.