Interest Rates Apt to Be on the Rise, Economists Say

Interest rates--including those on mortgages and other consumer loans--will probably head higher in the next several months, although the economy’s continued weakness will keep a lid on them, economists say.

The yield on the Treasury’s 30-year bond--a closely watched indicator of where other interest rates are headed--has risen more than 0.30 percentage points since Oct. 1 to 7.60%. Economists say it may go up another 0.25 to 0.50 points by the end of the year.

Market rates are rising not because of any economic fundamentals, but because of widespread fear among bond investors that Bill Clinton will be elected President in November and institute an economic growth package that will increase the federal deficit and be inflationary.