Price of Money Increases

One of the most potent arguments in favor of Rep. Chris Kelly’s billion dollar bonding proposal was that interest rates were at very favorable levels.  So favorable in fact that former President Bill Clinton ad-libbed in his convention speech last summer, “it’s like they’re paying us to borrow right now.”  But Clinton also observed, in an aside, that once the economy got going interest rates would tick up.   One year later, that forecast is ever closer, and the bond market has begun to discount the steadier growth.  As a result the historically low interest rates have inched off their bottoms. 

 

Interest rates – like the stock market – are famously impossible to predict, the one exception being perhaps when they have nowhere to go but up….

 

If bonding is passed next session, the year’s delay may cost – literally – a full percentage point.  That’s not the end of the world, but on a billion dollars, it’s a nice chunk of change.

 

Originally in June  20 MOScout.