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Why the days of ultra-low interest rates are likely over, Northeastern expert explains

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U.S. Federal Reserve Chair Jerome Powell during a press conference, following a meeting of the Federal Open Markets Committee, at the Federal Reserve, in Washington, D.C., on Wednesday, May 1, 2024. (Graeme Sloan/Sipa USA)(Sipa via AP Images)
image of U.S. Federal Reserve Chair Jerome Powell speaking at the Federal Reserve on Wednesday, May 1, 2024

Although the Federal Reserve held interest rates steady at roughly 5.3%, some economists still predict rates will be cut, likely this year. What is unlikely, however, is a return to the ultra-low, just-above-zero rates of the last decade, says Northeastern University economist Robert Triest. “My best guess is that we’ll be going back down to rates not as low as we had between the financial crisis and the end of the pandemic, but a lot lower than we’re at now,” says Triest, professor and chair of economics at Northeastern. 

“My best bet is roughly what the Fed has published, that the rates will be going back down to a little over 2½% for the ultra short-term rate,” he says. The Federal Reserve sets the federal funds rate, which is the rate at which banks lend to each other on an overnight basis to make sure that they all have sufficient reserves. The federal funds rate in turn affects other interest rates such as those on Treasury notes and Treasury bonds, and the rates at which banks can offer mortgagesinterest on accountscar loans, etc. 

Read more at Northeastern Global News.

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