When will FED raise rates?

This is a topic on everybody's mind and lips. Some force a catastrophe coming and complain that the market is not resilient enough for a raise in the interest rates. Others worry that keeping interest rates too low for a long time is what got us in the mess of late 2000s in the first place. Blame the mozart, Alan Greenspan for that!

The reality is we don't know how the markets will react. However, there is guarded optimism that any raise in interest rates will be minimal and that the Fed does not want to cause any structural changes in the economy just yet. Employment has fallen to an all time low of 5.4 percent, while the rate of inflation has not kept pace yet. These are never before seen situations and there is no one size fits all solution.

The good news is Janet Yellen is measured in her responses to the changes in the economy (while still taking the Fed to crazy town!!!!). I strongly believe the interest rates will raise this year. It will happen in the end of 3Q or early 4Q. The effects will not be seen immediately as the economy goes into a overdrive on consumption in those quarters. Whether investment is directly affected will be seen two or three quarters after the raise in interest rates.

No comments:

Post a Comment

Honey... show me the money!

Let's talk money.   We all need money to carry out day to day transactions in our lives. Whether it is to visit the grocery store or buy...