Forty Percent of Investors Believe Low Rates Will Prevent Downturn

This week’s Sentiment Survey special question asked AAII members for their thoughts on the Federal Reserve’s intent to keep interest rates at current levels until inflation “is on track to moderately exceed 2% for some time.”

Two out of five (40%) respondents say that low interest rates will benefit the stock market and prevent an economic downturn. This compares to 20% of respondents who say that low interest rates will have an impact on the long-term economic environment. About 19% of respondents say that they think the economy should recover on its own. In addition, 16% of respondents say that low interest rates are heavily impacting savers and retirees. Lastly, about 5% of respondents fall into the ‘other’ category.

Here is a sampling of the responses:

• “As a retired investor looking for income, I am not happy about low interest rates. For the stalled economy, however, it makes the most sense to stimulate growth and help businesses recover from the pandemic-related economic damage.”
• “I feel sorry for savers and us retirees that have to rely on our savings to live, since interest income is now minimal. We have to assume more risk or risk running out of money sooner than expected. And in the end, it may make no difference in boosting the economy no matter how low interest rates are if you cannot go out and spend your money on discretionary items due to the pandemic.”
• “Seems to make sense since I feel the economy is going to sputter over the next six to 12 months. The only concern is if we get into another dip, then another stimulus will be needed.”
• “The Federal Reserve has devalued the dollar and needs to keep interest rates low in order to allow the U.S. debt to be paid. High interest rates would cause an unstable government and quite frankly an unstable financial business environment.”

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