Tired of obsessing about interest rates? Too bad, because we can’t afford to stop

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While obsessing over interest rates is getting old, there’s little choice but to submit to the markets’ omnipresent force

By this point, you may be a little tired of thinking about interest rates. Are more hikes coming? What are mortgage rates going to look like in a couple years? How many times did the Fed use the word “uncertainty” in its last statement? Seven?!

The rise of interest rates is the “golden thread,” in the words of Ian Culley at All Star Charts. It’s the “key theme tying the major asset classes together, pulling price and all of us along with it,” the investment analyst wrote. Now, anyone with a variable-rate mortgage can attest to profound consequences currently being wreaked on their personal finances. On the other side of that arrangement, however, is a lender collecting those higher payments.

Some economists have started to question whether interest rates have lost some of their potency. “We may be living in a world where the interest rate is less of a tool for guiding the economy than it used to be,” former U.S. treasury secretary Lawrence Summers said last week. This time last year, economists were predicting with near certainty that a recession would begin within the following year. A Bloomberg Economics projection from that time put that probability at 100 per cent.has emerged, confidence in a soft landing has grown. Maybe we can get out of this inflationary mess with theThere’s a case to be made, in fact, that the rate hikes we’ve already endured will take even longer to work than they usually do.

 

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