Perna and J. Alan Day, vice president, senior investment manager and chief economist for Banknorth Group Inc., the parent of Banknorth Connecticut, said the hike in the federal funds rate will increase the yield of investment securities like Treasury bills and bonds and savings bonds.
...At this point in time, not even (Federal Reserve Chairman Alan) Greenspan knows the answer to those questions."
Perna and Day
both feel the Federal Reserve
will continue to raise rates in small increments over the next 18 months in an effort to ward off inflation.
Should they occur, a series of future rate hikes could make it more expensive for state and municipal governments to borrow money, which could result in higher state and property taxes, Day
They could also eventually slow down the real estate boom that reached record levels in many areas in 2003.Fewer homes being sold could have a corresponding negative impact on manufacturers and retailers of tools, lumber, paint and other home-improvement products, Day
said written comments by Greenspan that accompanied the announcement of the rate hike were "reassuring and benign."
"People don't like big, rapid changes," Day