New business tax cuts, a new Federal Reserve chair and lowinflation set the stage for interest rate hikes going into 2018.Speculation projected three hikes last year, but only two occurred.This was no surprise to industry experts who surmised a third ratehike would be unlikely because the economy was not in a position tosupport one. Most of the tax cuts set forth in President Trump'stax plan would not take effect until 2018, and would affectbusinesses more so than consumers. Plus, inflation was a marketfactor and growth seemed to be slower than expected.

How Much the New Tax Cuts Will Affect RateHikes

Well, it is now 2018 and the tax plan just went into effect.Businesses are positioning themselves to take full advantage oftheir tax rate plummeting from 35% to 21%. That's good news forthem. It's good news for the Feds too. The potential for interestrate hikes has directly increased as a result. Toward the end of2017 many investors thought there might be only two hikes in 2018because of inflation. The attitude of the markets certainly seemedto be positioned that way, and who could blame them? Sluggishinflation coupled with a sluggish growth rate usually meansinterest rates will remain the same.