Economic expansion predicted―but with caveats

摘要

Whether you trade Fed funds futures or simply have a stake in U.S. government bonds, being armed with insight on how this summer's interest rate saga will unfold is essential. Most analysts and traders say the Federal Reserve will act in 2004 and raise short-term interest rates for the first time in more than four years. Many believe by the time you are reading this article the market will be absorbing a 25 basis point increase. But the Fed will reconvene again already next month, and traders and investors want a long-term forecast. Just how high will rates go? Marshall B. Front, chairman of Front Barnett Associates LLC, an independent investment counseling firm in Chicago with more than $1.4 billion in client assets, says that by the end of this year the federal funds rate will be at 1.5% to 1.75%, and could possibly reach 2%.