One big question now on Wall Street is how much the Federal Reserve will raise rates once it gets started hiking them.
A lot of bond market folks are quick to look at the average size of rate hikes in past business cycles as a guide to what happens now, which would mean the fed funds rate could go from its 45-year low of 1% up to about 5%.
That would be a move that could push long-term rates a good bit higher too.
What will be key for the Fed, however, isn't history but the present. If inflation rises only a little and jobs pick up to normal and the economy grows but doesn't roar, the Fed may figure it doesn't need to raise rates all that much.
The latest news on the economy is good - the weekly ABC/Money Magazine Consumer Comfort Index rose further out of the basement and the weekly mortgage applications to purchase homes had a nice pop up.
Refinacings fell back some more but that's to be expected with mortgage rates moving up toward 6%.
And that's another reason the Fed may not go crazy raising rates. As long-term rates move higher, boosted in part by the Fed's rate hikes, that could take some bloom off the economy's blossoming rose.
Kathleen Hays anchors CNN Money Morning and The FlipSide, airing Monday to Friday on CNNfn. As part of CNN's Business News team, she also contributes to Lou Dobbs Tonight.
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