The Fed sets interest rates for the immediate future. And for two reasons, interest rates are likely to be higher, perhaps much higher, in the coming decade than in the prior one. That would suggest that the economy has become less vulnerable to higher interest rates. There’s no good way to predict the impact, if any, on U.S. interest rates. Higher inflation would aggravate the deficit’s impact on interest rates; lower inflation, a demand for bonds by an aging population or panicked investors would soften it.

Source: Wall Street Journal October 10, 2024 11:34 UTC