Philadelphia Federal Reserve Bank president Patrick Harker will be the keynote speaker Thursday, Feb. 28, at the Inquirer’s Influencers of Finance event — and may provide insights on the thinking behind the central bank’s moves on interest rates.

The Fed’s rises in rates last year — and its intention to do more — were thought to be factors in the stock market’s late-year swoon. So where are we in the interest rate cycle?

Courtesy of Matt Topley with Fortis Wealth Management, we can share the following analysis from LPL Research: Nominal gross domestic product — GDP growth without removing inflation — grew 5.5 percent year over year through the end of the third quarter of 2018, the fastest pace since the third quarter of 2006. By comparison, the Fed funds rate was 2.25 percent at the end of the quarter.

That’s a historically low rate, especially amid strong economic growth. So history bears out that the Fed has some room to raise rates if needed, LPL said in its research.

“Since the end of 1970, the spread between nominal GDP growth and the upper bound Fed funds rate has been about 1.2 percent, signaling that the Fed still has ample room for hikes based on output growth,” LPL told clients. That spread is now 3.25 percent.

“We still believe the fundamental U.S. economic landscape is compelling, and despite market concerns, monetary policy remains accommodative and the Fed’s plans are data-dependent," LPL chief investment strategist John Lynch said. Plus, “we expect the data-dependent Fed to be less aggressive than initially feared as policymakers juggle domestic and global conditions.”

Separately, it’s not too late to nominate someone (including yourself) as an Influencer of Finance. Here is a link to the event: The deadline is Monday, Jan. 14, for nominations.

Current interest rates are historically low relative to output growth; the Federal Reserve’s path of increasing interest rates isn’t unusually cavalier given economic strength.
Current interest rates are historically low relative to output growth; the Federal Reserve’s path of increasing interest rates isn’t unusually cavalier given economic strength.

Retirement Savings: Higher in 2019

It’s never too late to contribute to retirement accounts. And now we can save more.

The maximum we can contribute to a traditional or Roth IRA for 2019 is $6,000 per individual (not per account). There’s also the additional $1,000 catch-up that can be made to either account if you will be 50 or over during the year. Those are the new limits under tax rules.

The contribution limit was raised from the $5,500 level in place since 2013, under inflation adjustments issued by the IRS.

Company plans, however, have higher limits, according to IRA analyst Jeremy Rodriguez with Ed Slott’s Participants in 401(k) plans will be able to set aside up to $19,000 before taxes next year, up from $18,500, the IRS said.

Despite the government shutdown, the IRS confirmed it will process tax returns beginning Jan. 28 and provide refunds to taxpayers as scheduled.

“We are committed to ensuring that taxpayers receive their refunds notwithstanding the government shutdown. I appreciate the hard work of the employees and their commitment to the taxpayers during this period,” IRS Commissioner Chuck Rettig said in a news release.

The filing deadline to submit 2018 tax returns is Monday, April 15, for most taxpayers. Because of the Patriots Day holiday on April 15, taxpayers who live in Maine or Massachusetts have until April 17 to file their returns.

Also, don’t forget if you make $66,000 or less in gross income, you can file taxes for free.

Starting Friday Jan. 11, taxpayers can go online to to find Free File software.

The Pennsylvania Society of Tax and Accounting Professionals will host meetings for tax practitioners, including "Tax Potpourri” on Friday, Feb. 1. For more information or to register, visit PSTAP’s website:

Cents and Sense for Kids

The Please Touch Museum has a new exhibit for adults and children on personal finance, titled “Cents & Sensibility."

It’s a financial literacy-focused exhibit built around the core concepts of spend, share, and save, and designed in alignment with Pennsylvania core curriculum standards to support school readiness and learning for ages 3 to 7. A school tour free of charge will be offered to early-grade Philadelphia public school students. For parents, the exhibit offers vital resources to begin financial conversations with children.

The Please Touch Museum is located at Memorial Hall, 4231 Ave. of the Republic.