Business: Good News On Interest?

For most consumers, rising interest rates are an ill wind: they inflate the cost of borrowing to buy or build. But, to bend a proverb, the rise may soon blow some good to one group: savers.

Members of TIME’S Board of Economists predict that the Federal Reserve soon will ease its Regulation Q and allow commercial banks to pay higher interest on passbook savings, which can be withdrawn at any time. Regulation Q now sets a ceiling of 5% on them. If that is raised, the Federal Home Loan Bank Board also would have to permit savings and loans to pay more than their present 5½% maximum. Otherwise, savers would be tempted to pull out their money and invest it in Treasury bills and other paper that yield up to 6½%—a process that chokes off credit to the housing market.