As European governments bailed out national banks, foisting the costs on taxpayers, investors demanded higher interest rates to continue lending, raising existential questions about the euro.
The most significant immediate effect of this new signal from the Fed is that it will be much harder for Treasury, home mortgage and corporate interest rates to continue to drift lower.
"I expect interest rates to continue down," said Gilbert G. Roessner, chairman and chief executive of City Fed Financial Corp., which has its corporate headquarters in Florida, where the perpetually tanned Mr. Roessner lives and works.
"Those low interest rates ought to continue to fuel the organic, cyclical recovery that we are enjoying right now".
"With interest rates likely to continue on their upward path, it's a warning to borrowers to think long and hard before taking on further debt," he said.
With money flowing and interest rates predicted to continue rising, what's the obvious thing to do?
As interest rates continue to stay low, the housing market has been one of the few bright spots, and builders continue to benefit.
But Moody's analysts warned then that "if interest rates continue to remain at current levels, we would anticipate further downgrades".
Despite all this pessimism, Williams feels that home building activity in the Southland will be better in 1987 than last year-- if interest rates continue to stayear-- if
To summarize, if the rest of the world's economies continue to weaken and if global interest rates continue to fall and finally, if the U.S. economy continues to expand, U.S. stocks could continue to be the favored investment.
Those in favor of raising interest rates pointed to continuing job creation.
