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Low-interest-rate policies hurt seniors' earning power, Charles R. Schwab writes 2010-03-31 The Federal Reserve has been relying on a policy of low interest rates to spur bank lending and kick-start the economy - yet its policy may also be damaging the savings portfolios of many seniors. The Fed's Open Market Committee sets a target rate eight times a year; at its most recent meeting on March 16, the central bank decided that the economic situation warranted "exceptionally low levels of the federal funds rate for an extended period" - the same language used in past policy sessions. But, brokerage founder Charles R. Schwab wrote this week in the Wall Street Journal, the government's "easy money" policy is doing real harm to the portfolios of seniors who rely on fixed-income investments. The average yield on a one-year certificate of deposit has slumped 76 percent in the past four years, he wrote - meaning that retirees using CDs have 76 percent less income available to them, even before the effects of inflation are considered. "Those in Washington," Schwab said, "should keep [seniors'] plight in mind as they consider Fed monetary policies going forward."  |
