Low inflation hurts, but it's still the saver's friend

Article Abstract:

Savers may argue that they do not benefit from low inflation because interest rates are low, so their savings income falls. Real interest rates fell alongside inflation in the early 1990s, and real interest rates have tended to rise with rising inflation, as a way of curbing inflation. The tax system does not reflect inflation, so the net effect may be that savers benefit from lower interest rates, since the tax take is lower on income from savings. Mortgage holders face lower borrowing costs when inflation is low. Borrowers can use flexible mortgage products to control their debt levels.

Personal Financial Mgmt, Economic aspects, Personal finance, Inflation (Finance), Savings, Inflation (Economics)

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Accelerating

Article Abstract:

World economic growth is likely to rise less in 1997 than it did in 1996 and inflation is not likely to be a problem in 1997, according to Goldman Sachs. Monetary policy world wide is expansionary and this should help boost economic growth. Tighter Japanese fiscal policy could pose a problem for world growth rates. Tighter monetary policy is not expected during 1st half 1997, though this could change for the US. The German Bundesbank is likely to hold interest rates stable during 1st half 1997.

Interest Rates, Monetary policy, Economic forecasting, 1997 AD

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