Savers are about to learn one painful and one surprising lesson about interest rates and banks.
First, just because the Federal Reserve is raising rates doesn’t mean the rate investors earn on their cash will rise as much — if at all. In fact, the financial repression in the form of zero rates suffered for more than a dozen years by those who are ultra conservative with their savings isn’t going away soon. Second, banks don’t want your money. Understanding these dynamics will go a long way toward explaining why the stock market and other riskier assets may prove resilient to the tighter monetary policy that is coming as the Fed seeks to bring down the highest rates of inflation in 40 years.
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