Impact of Government Spending Jayhawk Forecasting Services analyzed several factors that could affect interest rates in the future.
Most factors were expected to place downward pressure on interest rates. Jayhawk also expected that, although the annual budget deficit was to be cut by 40 percent from the previous year, it would still be very large.
Thus, Jayhawk believed that the deficit's impact would more than offset the effects of other factors, so it forecast interest rates to increase by 2 percentage points. Comment on Jayhawk's logic.