Money makes the world go around, but interest rates help determine where the money goes.
The past several days have seen ripple effects, well, ripple, as the economy absorbs the recent Fed rate hike, and interest rate watchers (who include, of course, people who own businesses or people who invest) take stock of where key lending rates may go. The overarching question is where rates will go this year and when.
Interest rate timing can have a bit of an impact on hiring, creating new jobs or hiking salaries to keep workers relatively satisfied in their current positions. The wild card for interest rates lies with the incoming Trump administration, where we’ll get the answers as to how much of the election campaign promises and rhetoric will become law.
The biggest pieces of the puzzle have to do with infrastructure spending and taxes, of course, alongside trade reform. The promises of sweeping reform and regulatory rollbacks imply that growth is meant to be unfettered in some respects, but interest rates, like stocks, tend to anticipate change before change becomes reality. Stocks are up, rates are up and that means the expectations are for growth.continue reading »