Ask a goalgami Expert:Answer

Have a financial question?SUBMIT>



Question:


When are interest rates expected to rise again?
-DonaldR


Answer:


Ben Bernanke, the Federal Reserve chairman, has said that short-term rates, which govern rates on Treasury bills, money-market funds and many bank certificates of deposit, are likely to stay low at least through late 2014. You would think that if anybody could predict the course of interest rates, it's the Fed chairman, but ultimately rates will be set in the markets. With recent data on employment, retail sales and consumer confidence coming in surprisingly strong, the economy seems to have turned a corner.
 
It's always possible that it will retrace its steps, however. Economists warn that the expiration of Bush-era tax cuts at the end of this year, combined with efforts to rein in federal spending, might knock more than three percentage points off annual economic growth, possibly creating another recession and keeping interest rates where they are or sending them even lower. If the recent strength does continues, it probably will stir concerns about inflation. That in turn would probably push short-term rates higher in coming months. More important, long-term rates, on which mortgage rates are based, could go up substantially.
-Conrad de Aenlle



< BACK