Why Are Interest Rates Moving Upward?

Interest rates are currently high due to several factors:

1. Inflation Concerns:
   • The Federal Reserve has raised the federal funds rate to curb inflation.
   • Higher rates aim to slow down spending and reduce price increases.
2. Economic Recovery:
   • As the economy rebounds, demand for credit rises.
   • The Fed adjusts rates to balance economic growth and inflation.
3. Government Spending and Borrowing:
   • Increased government spending without corresponding tax hikes raises deficits.
   • This puts upward pressure on interest rates.
4. Structural Shifts:
   • Demographic changes affect credit supply and demand.
   • Aging populations reduce credit availability.
5. Commercial Real Estate Risks:
   • Vulnerabilities in the commercial real estate sector and rising borrowing could trigger inflation.

In summary, a combination of factors contributes to the current high interest rate environment.

For more details, explore the article on why experts say high interest rates will be around for a long time.