The Bank?

Question 1. The Federal Reserve Bank is contemplating raising interest rates. The rates they can directly impact are the discount rate and the federal reserve target rate. Many believe that the FED can control rates from the over night rate (discount) to the 2 year rate. The longer term rates 5, 10, 20 etc may be determined by bond traders. If bond traders believe inflation (prices) is not increasing or going down, the long term rates will not rise with the discount rate, but will actually fall. Many of our loan rates (cars, student loans, mortgages)are based on the 10 year Treasury note (rate).

The question is: DO you think inflation (prices rising) is occurring? Do you see prices rising of things you purchase and wages? Will long term rates decline or increase in the near future. What’s your opinion?

 

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