The Fed’s Plan to Stop Inflation: What It Means to CD Values
Conservative investors who hold money in CDs, money market accounts, or savings accounts may feel like they’re between a rock and a hard place:
They by all means want higher interest rates on those deposit accounts, but they also are worried about the poor economic conditions of the country as a whole.
The basic fear underlying these concerns is of inflation–that the value of the money held in CDs, money market accounts, and savings accounts will decline because there are simply too many dollars sloshing about the economy thanks to the Federal Reserve’s “easy money” policies.
Fear of inflation is particularly acute for holders of CDs, which are locked in for a set period of time, and customarily cannot be withdrawn without a penalty. The idea of being locked into a falling investment is no one’s idea of fun.
On Wednesday, Chairman of the Fed Ben Bernanke was slated to appear before Congress to explain his plan for preventing inflation. The massive snowfalls in D.C. prevented an actual visit, but Mr. Bernanke nonetheless submitted written testimony describing his plan to prevent inflation.
If you are concerned about the value of your CDs, money market accounts, and savings accounts, Bwernanke’s inflation-prevention plan deserves your review and your scrutiny. Read about it here.
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