What Will Lift Deposit Rates First — Inflation or Growth?

September 23, 2013


This is the first installment of MoneyRates.com’s Money Perspectives series, in which a panel of academics offer insights on economic issues.

If you depend on interest from a savings account for part of your income, the historically low interest rates of recent years have likely posed some challenges for your finances. For thoughts on what could end this era of ultra-low interest rates, these professors answer the question:

Dr. Maclyn Clouse, Sorensen Distinguished Professor of Finance at the University of Denver’s Daniels College of Business

I don’t expect either one to have much of an immediate impact. Economic growth is still slow and inflation is still low. Most banks have more deposits than they need. There is no reason to increase rates to attract more deposits until there is more loan demand, which may finally happen if we see faster economic growth.