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Commentary By Allison Schrager

Higher for Longer? Rates Could Be Higher Forever

Economics Finance

If borrowing costs remain elevated, there will be greater downside risk for investments. But it's not all bad.

Our holiday from history has come to an end. I am referring not to world peace but to the zero-interest-rate environment so many people expected would last forever. Despite all the talk about when the US Federal Reserve will cut rates and bring back those holiday vibes, there is a very real possibility that it will not matter when the cuts happen or how many there are.

That’s because the interest rates that matter for much of the economy — longer term US Treasury bills — may not just be higher for longer: They may be higher forever. And that would mean a new era not only for investing but also for the economy.

Continue reading the entire piece here at Bloomberg Opinion (paywall)

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Allison Schrager is a senior fellow at the Manhattan Institute and a contributing editor of City Journal.

Photo by Drew Angerer/Getty Images