Interest Rates Outlook

Rising oil prices, an improving outlook for the goods producing sector and speculation of a higher inflation target for the Fed increase the short-term upside potential for long-term interest rates, but do not change our expectation of falling long-term rates later this year....
 

As the downward pressure on inflation from diminishing supply side problems subsides, inflation could rise again due to ample financial conditions and large government deficits. As a result, according to some economists, the Fed will not cut interest rates this year. This is creating more upward pressure on long-term interest rates, but we don't see this lasting for long....

With inflation falling less sharply than expected and financial conditions becoming looser, some analysts are wondering whether the Fed will cut interest rates this year at all ...