Jack Harty with Harty Mortgage Advisors frequently updates his clients with wit and humor.
WARNING: Don't believe the Subject line above.
There is no reliable method for predicting interest rate movement beyond the next fiscal quarter. While there are many methods for predicting the future of rate increases, none are highly reliable.
Some methods are marginally more reliable than others, but in the end predicting rates is as reliable as predicting how dice will roll.
Since December 2015 the Fed has raised short-term interest rates seven times. At its August meeting the Fed held steady and did not raise rates (see step-graph below).
However conventional wisdom, strongly anchored in Fed pronouncements, anticipates another rate increase in September 2018 and probably yet another by December. Looking into 2019, which is through a glass darkly (1Corinthians 13:12), the betting is that rates will be increased another two to three times.
Counter forces that may restrain future rate increases include effects of a trade war, political turmoil in the US and elsewhere and domestic employment dynamics, to wit: While unemployment has declined over the past two years (from 4.9% to 3.9%(, the rate of wage growth has also declined during the same period (from 2.8% to 2.7%). In 2018 wage growth has barely exceeded and at times fallen below inflation. In 2018 inflation has ranged from 2.1% to 2.9%.
Federal Reserve Rate Increases 2014 - 2018
There is an obvious stair-step pattern to interest rate increases during the past couple of years.
The picture for upward movement of future interest rates is a cloudy picture (see cloudy picture below).
Graph for Rate Increases 2019 - 2020
Notwithstanding future interest rate uncertainty, it is currently certain that interest rates are still at virtual 40-year low point...and that ain't so bad.
10 Yr Treasury Bond Yield: 1978 - 2018
HARTY MORTGAGE ADVISORS
950 W. Bannock St. - Ste 420
Boise ID 83702
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