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Stocks/Funds and State of the Economy

February 16: State of the Economy Two things drive long-run interest rates: Inflation and economic growth. Some inflation is on the supply-side and those bottle-necks should continue to abate. Inflation due to too much consumer demand can be effected by the Fed through monetary tightening and raising short-term interest rates (the discount rate). But, by tightening, the Fed will increase borrowing costs for some small businesses and industries and worsen the supply-side problem as well. Still, the broadest effects will…