The Fed’s Updated Projections on Raising Interest Rates

Interest rates are one of the most important factors influencing economic activity, costs and prices of goods and property, and company profitability.  As interest rates rise, debt becomes more expensive and carves into personal income and company revenue due to items including student loan interest, house mortgage payments, and corporate borrowing for investments in capital equipment.  Residential home prices, in particular, can experience significant downward pressure from rising interest rates since any given amount of personal monthly cash flow available to service a mortgage payment has a lower corresponding maximum home purchase price as interest rates increase.  As the Federal Reserve looks to likely increase interest rates at a more aggressive pace than previously anticipated, investors will benefit from understanding the implicit risks and opportunities for stocks, bonds, real estate, and other asset classes.

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- Anthony Winkels is Managing Partner and Wealth Advisor at Fortis Wealth Management