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The good and bad in a rising interest rate environment

Stephen Entin, a Senior Follow at The Tax Foundation, recently wrote about the increase in interest rates that is likely now that the Tax Cuts and Jobs Act (TCJA) has passed, and drew a number of conclusions:

  • Pro-growth provisions in TCJA are expected to raise returns to investment and saving, including interest rates.
  • Rising interest rates stemming from TCJA would be a positive sign that the tax cut is working to encourage capital formation, and should not be cause for alarm.
  • The Federal Reserve may choose to increase interest rates even more out of unwarranted fear that growth, per se, is inflationary, negatively effecting the economy and offsetting some of the growth expected from the tax bill.
  • Deficit concerns are real, but need perspective as to cause and effect.

Continue reading at The Tax Foundation.

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