BROADCASTS.com

b"With David Payne, Staff Economist \\u2013 Kiplinger Letter



Everyone\\u2019s wondering what\\u2019s next for interest rates that have been at all-time lows for the past 6 \\xbd years. David Payne sheds some light on this and talks about how job growth and inflation play into the Fed\\u2019s decision.

David is both staff economist and reporter for The Kiplinger Letter, overseeing Kiplinger\\u2019s forecasts for the U.S. and world economies. Previously, he was senior principal economist in the Center for Forecasting and Modeling at IHS/GlobalInsight, and an economist in the Chief Economist's Office of the U.S. Department of Commerce. David has co-written weekly reports on job growth and economic conditions since 1992, and has forecasted GDP and its components since 1995, beating the Blue Chip Indicators forecasts two-thirds of the time. David is a Certified Business Economist as recognized by the National Association for Business Economics.

David expects an increase in interest rates by the end of the year based on Fed Chair Janet Yellen\\u2019s comments but there are doves and hawks within the Fed\\u2019s rate setting committee so the jury will continue to be out till rates are raised.

The Fed, of course, will base its hike on economic fundamentals. One of the data points the Fed watches is job growth and employment \\u2013 which is doing pretty well in the U.S. and supports the case for a rate hike. But another Fed measure \\u2013 inflation \\u2013 isn\\u2019t an issue; it\\u2019s well below the Fed\\u2019s 2% threshold rate for action due to factors such as low oil prices and a strong dollar that continues to make imports less expensive. Slowing growth in China also raises concerns over the strength of the global economy, and gives pause to U.S. economists.

Now, when rates rise \\u2013 which they will at some point, who knows when \\u2013 David expects the increase to be slow and measured, as the bond market expects \\u2013 with about one rate rise in mid-2016 and the other towards the end of 2016.

David also talks about how a rate rise will ripple through other borrowing costs and rates on CDs. With the Fed meeting this week, let\\u2019s wait and see what they say about the state of the economy and inflation."