Inflation is Back - Deep Breath - Now Lets Move Forward
Wall Street finally figured out what most Americans already know. Inflation is back. The Consumer Price Index rose in January and that hints at inflation being on the rise.
Its small wonder that inflation is hear as milk hits $4 a gallon, gas hits $3.10 and oil keeps hovering over $100 dollars a barrel. What is amazing is that the Fed has managed to keep its basket of goods that is used to calculate the CPI shielded from reality for so long!
This explains quite a few things, one of which is why home interest rates are still fairly high and even more so why all other loan rates are high. When inflation is present banks tack it on to their interest rates to cover . . . . the cost of inflation.
The Fed can lower rates all day long, but there is only so far down they can go, while inflation can keep going up, especially if the country keeps spending money on a war that we can no longer financially afford. Things have to change and they have to change for the better quick or they are going to get ugly for the long haul. If you can lock in a low interest rate loan, now is definitely the time to do it. If inflation hits the banks, you will not see a rate drop.
In the meantime, get out and gets some exercise, take a yoga class or something, if its too cold out, hit the elliptical machine (keep your knees safe) and burn off some of that stress. All of us are going to need to keep our disposition in check while we simultaneously keep our noses to the grindstone.
In the meantime, if you can not sell your house, start thinking about how you can rent it out. If double digit rates hit the country in the next few years, not too many people will be able to afford to buy and rental demand will increase. This could be an investment or it could be a necessity of financial survival depending on your situation.
