Alaskanomics's Blog: Alaska Economic Update- Interest Rates
As promised, below is the first section form our annual Economic Update. The full report can be found in our 'What's New' section of Alaskanomics.
Interest rates are rising – You can see in the graph below that since the end of 2012 interest rates for all maturities longer than one year have risen. The 10 year bond is highlighted. It rose 1.26% in 2013. Expectations are for rates to continue to rise as the Fed tapers it’s purchasing of longer maturity bonds and mortgage backed securities now that the unemployment rate has hit their target goal of 7%. At 6.5% they have signaled that they would start pushing the overnight Fed Funds rate up, which would create separation on the left side of the graph. It has remained at the historically low 0% - 0.25% target rate since December of 2008. This is unprecedented accommodative monetary policy for an extended period of time. It is likely that any rate Fed Funds rate increase would come at a slow and measured pace.
Posted: April 15, 2014