Are rising interest rates good?

[midnight]

I know that rising interest rates are good for bank accounts and when the Fed raises their rates, I usually see an small increase in the interest I earn in my saving account. But don't these rate increases also mean that it costs more for business to operate so they are likely to increase their prices. It wouldn't take much for that small increase to wipe out all the gain. So are interest rates increasing a good thing or a bad thing?

[JLP]

Re: Are rising interest rates good?

I know that rising interest rates are good for bank accounts and when the Fed raises their rates, I usually see an small increase in the interest I earn in my saving account. But don't these rate increases also mean that it costs more for business to operate so they are likely to increase their prices. It wouldn't take much for that small increase to wipe out all the gain. So are interest rates increasing a good thing or a bad thing?

It all washes out in the end (as long as there are no extreme fluctuations). Interest rates on "safe" fixed accounts are pretty much a reflection of current inflation rates.

It works out much the same way that minimum wage works. Sure, they may raise minimum wage and those people may feel "richer" for a short while. But, eventually prices WILL RISE in order to pay for that wage increase. Then all the sudden we are back where we started and Congress starts talking about trying to pass another minimum wage increase. It makes little sense to me.

JLP