Chairman of the Federal Reserve tells savers that the possibility of good savings returns lies in the health of the economy.
Reminiscing of the days of a 5.00% APY on high-yield savings accounts offers a moment of nostalgia as consumers frown at a 1% return on their cash.
To the savers dreaming of the comeback of lucrative savings rates, the head of the Federal Reserve, Ben Bernanke, says the great rates will come with the recovery of the American economy.
During Wednesday’s press conference following November’s Federal Open Market Committee meeting, Bernanke gave some attention to consumers who’ve been looking for answer as to when they’d start seeing their cash grow faster.
In a reply to a question regarding the effect of monetary policy on savers, he said:
“I think the response is, though, that there is a greater good here, which is the health and recovery of the U.S. economy. And for that purpose we have been keeping monetary policy conditions accommodated and trying to support recovery – trying to support job creation. After all, savers are not going to get very good returns in an economy which is in a deep recession.”
In 2007, when online savings accounts from ING Direct and HSBC Direct (now called HSBC Advance) offered near 5% APY, unemployment ranged from 4.6 to 5.0 percent, according to the U.S. Bureau of Labor Statistics.
In the official Federal Open Market Committee statement, the Committee found that economic growth has made progress in the third quarter but also continued to highlight “weakness in overall labor market conditions” and the “elevated” unemployment rate.
The FOMC has reiterated its position in keeping rates at “exceptionally low levels” until mid-2013.
“Ultimately, if you want to earn money on your investments, you have to invest in an economy which is growing,” added Bernanke.
“And so we believe that our policy will ultimately benefit not just workers and firms and households in general, but will benefit savers as well as the returns that they can earn on their investments will improve with the improvement in the economy.”