Long Term Interest Rates Edging Up For 2018 Winston Rowe & Associates

DETROIT - Feb. 4, 2018 - PRLog -- Long-term interest rates are heading up next year, but short-term rates will outpace them.

Tax cuts for both businesses and middle class individuals should goose the economy going forward.

Improving business profitability should generate business investment, but some of the bigger profits will go toward stock buybacks and shareholder returns.

The rising stock market and burgeoning home values will encourage consumer spending, but until workers see bigger bumps in their paychecks.

The modest pickup in inflation will keep long rates from rising as much as short ones. Eventually, an anticipated inflationary hike will also increase long rates, but not for a while.

The expected deficit increase that will accompany the recently enacted tax package will also boost long rates a bit.

The Fed will keep raising short rates because of falling unemployment and other indicators that show a tightening labor market.

The Fed very much wants to stay ahead of any inflation that rising wages may generate.

It will lift short-term rates by a quarter of a percentage point two to three times in 2018. That will put the federal funds rate at 2.0% to 2.25% heading into 2019.

Winston Rowe & Associates published this article. They can be contacted at http://www.winstonrowe.com