The GOOD Side Of Rising Interest Rates | Dovish Explanation

We use a lot of different animal terms in the stock market... you might have heard of a bear or bull market, but doves? 

A "dove" is a financial policy maker that believes interest rates should be kept low and inflation isn't bad. 

They believe low interest rates support economic growth. 

Do we think this is a good or bad belief? Let's talk about it. 

When interest rates are low, it entices people and businesses to borrow money. 

During this time, companies may borrow money to expand their office buildings or fund a new project. 

People that are looking to purchase a home may be willing to buy a larger house than originally planned. The low interest rate will keep that larger, more expensive house in line with their desired monthly payment. 

When a lot of people can borrow money at a low interest rate, this may encourage them to buy more, which can disrupt the supply chain. 

This could make things more expensive, because more people can afford to buy, but there may not be enough supply.

Borrowing money at a lower rate may also encourage people to do things they normally wouldn't do, such as borrowing money to live off. 

You may have businesses looking to expand, but can't find individuals to work.

In the housing market, you may also have buyers offering over asking price because they might only be concerned with their monthly payment, and not the overall price of the house. 

Now that we've talked about the pros and cons of the dove mindset, how are the rising interest rates affecting your financial decision making?

Join the discussion and share your thoughts here, at Power Trades University.