Redrick Terry:
It is time now for 4 Your Money. We’re joined by David Nelson, CEO of NelsonCorp Wealth Management. David, welcome back.
David Nelson:
Thank you, Redrick, I appreciate it. Thank you.
Redrick Terry:
Absolutely. So we talk about the Federal Reserve a lot here, and we know that they’ve been very clear about keeping interest rates low for the foreseeable future. We haven’t really discussed other countries’ central banks in detail, but they do play an important role as well. So what has your attention as far as that goes?
David Nelson:
You’re exactly right. The US obviously just being the significant presence that we are as far as globally of the interest rate changes that take place in the United States are obviously the most significant as far as around the globe. But ignoring the other countries as far as potential changes, as far as in interest rates, can be a mistake as far as in that regard. I brought along a chart today that I think will be a nice visual for folks to kind of see. The blue line, what we’re illustrating here is as it’s going up, what it’s illustrating is the number of countries that were cutting interest rates. So, central banks around the globe had been cutting interest rates for a while now, trying to, again, head off some of the pandemic issues and to try to keep their economies rolling.
David Nelson:
Some of this is coordinated where you have several of the large countries get together and try to talk policy as far as what will be best for the world, and they make those decisions. But what we’re seeing here recently in the very far right of the blue line, you see we’ve got kind of a yellow circle around it. That’s showing that the line is starting to move down, which is basically a way of illustrating that no longer we having more countries cutting rates, but we have some countries rather, that are actually increasing interest rates, which big picture is kind of a good sign, I guess, it means that those economies are doing well. And in the central banks, and those various countries are concerned about inflation raising up, and so they’re starting to raise interest rates to try to head some of that off.
Redrick Terry:
So what can cause that, or be a disparity between different countries and their policies?
David Nelson:
So each central bank has a mandate, as far as that and that typically is going to send around GDP, which is a fancy way of saying basically the economy gross domestic product is what it stands for, but it’s looking at the economy as a whole, is it growing, is it shrinking? It’s looking at employment. Typically it’s looking at inflation, the financial stability. In other words, the markets, as far as the stock markets in those countries. And again, recently, what we’re seeing here, is that there are some countries that are starting to raise rates. And again, probably a pretty good sign overall that hopefully this pandemic is starting to move behind us a little bit and we’re starting to move forward.
Redrick Terry:
We’re certainly hoping for that. So is this something that could impact people’s investments?
David Nelson:
Yeah, absolutely. Interest rates are a major force, when we talk about investing. It’s a big variable that factors into decisions corporations make as first with the money. It impacts currencies and currency certainly impact as far as the stock markets are concerned. So this is a big, big item, and people should be paying attention. We’ll continue to keep you up to date as far as via this medium, but don’t fall asleep as far as on this right now. Inflation could come back and if it does, it’s going to be a big, big concern, as far as that we need to keep an eye on.
Redrick Terry:
Yeah, we will be watching for sure. David Nelson as always, we thank you for being with us today.
David Nelson:
Thank you, Redrick.
Redrick Terry:
And if you missed any part of our discussion, we’ll make it available to you at ourquadcities.com.