The European Central Bank said a few weeks ago that it was going to raise short-term interest rates, as noted in this earlier blog post.
Guess what? They meant what they said. Last week the ECB raised rates from 1 to 1.25%. As is the case in the US, the ECB is trying to balance a possible reduction in investment and GDP against the need to adjust interest rates for rising inflation. The economic situations are not exactly alike -- inflation is currently higher in Europe than it is in the US and unemployment is not as high in Europe as it is here.
Nonetheless, the days of zero short-term interest rates are probably numbered. I would be careful about buying any 24 month CD paying 1.5%.
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