Whitman Professor Offers Insight on the Expected Increase of Interest Rates

Tom Barkley, professor of finance practice at the Whitman School, talks about the Federal Reserve Board expected to increase interest rates this week.

“The Federal Reserve Board of Governors will be meeting tomorrow and Wednesday, evaluating economic projections, and in all likelihood announcing an increase in interest rates. The information associated with this increase has already been factored into the futures market, so that a 25 basis point increase in rates is unlikely to have much of an effect on the value of equity indices. On the other hand, the Fed may choose to leave rates unchanged or increase them by 50 basis points – either of these moves are likely to cause a change in a number of stock prices, favorably if the former outcome occurs and less so if the latter one. Overall, the U.S. economy seems to be doing well relative to the rest of the world, and so a slight increase in rates should not have much of an effect on businesses, large or small. In the medium to long term, expectations are that rates will rise, inflation will increase, and eventually wages will move in the same direction. At this point, the biggest surprise to the markets would be if the Fed did NOT increase rates.”

Barkley is available to speak to media about interest rates. Please contact Kerri Howell, Director of Communications and Media Relations at Whitman, 315.443.3671 or kdhowell@syr.edu.