Kiplinger’s latest forecast on interest rates iStockphoto By David Payne, Staff Economist March 13, 2020 GDP Unemployment Interest Rates Inflation Business Spending Energy Housing Retail Sales Trade Deficit GDP -2.0% growth in 2020, down from 2.3% in 2019 More » Jobs Job losses in Q2 and Q3, strong pickup after that More » Interest rates 10-year T-notes staying below 1.0% in March and April More » Inflation 1.8% by the end of '20, from 2.3% at end '19 More » Business spending Down in '20 because of global recession fears More » Energy Crude trading as low as $15 per barrel More » Housing Total starts up 3.2% in '20 More » Retail sales Retail and food service sales, excluding autos and gas, should rise 3.5% in 2020 More » Trade deficit Widening 6% in ’20 More » The Federal Reserve lowered its interest rate by half of a percentage point on March 3 in response to the threat of a coronavirus-induced slowdown. It is likely to cut by a full percentage point at its March 18 meeting, bringing the federal funds rate to zero. This means that any further Fed action will have to be through alternative measures instead of through short-term interest rates.The Fed has a long history of stepping in when markets are panicking and business or consumer sentiment is dropping. The Fed is making larger-than-normal cuts in order to send a message of reassurance. While it is unlikely that an interest rate cut will address the real causes of the slowdown, it will have symbolic value and may boost consumer borrowing for motor vehicles. Sponsored Content Long rates are near record lows, and the 10-year Treasury yield is likely to stay at or below 1.0% for awhile because of fears that the coronavirus panic may weigh on the economy. The U.S. economy is likely headed toward recession, because attempts to contain it are causing a slowing of both consumer and business spending and activity. When the stock market heads down because a recession look more likely, investors rush to Treasuries as a safe haven. via e-mail: Kiplinger Alerts — Intelligence for your business success The bank prime lending rate fell to 4.25% after the Fed acted on March 3, and should drop to 3.25% when the Fed cuts again. Average 30-year mortgage rates are likely headed down below 3% because of the drop in the 10-year Treasury rate. Low mortgage rates should contribute to a good housing market this spring by making mortgages easier to afford. Low rates won’t boost business borrowing much, though. Source: Federal Reserve Open Market Committee See Also: America’s Yield Curve Panic Is Overdone