Fed meeting: What’s the impact if rates go up?
On March 15, all eyes will be on the Fed to see if they will increase interest rates at the Federal Open Market Committee meeting. When looking at key economic indicators like unemployment, housing, manufacturing and consumer sentiment, which are all at historic highs, the positive data would indicate that the Fed will likely raise interest rates in March.
Recently, I was included in a U.S. News & World Report article about the impact of an impending rate hike. While a rate hike is indicative of the economy continuing to strengthen, I believe it will have minimal impact on investors. Both equity and fixed income markets have factored in a rate hike in March or in the very near future. As long as it’s 25 basis points, it will likely have a marginal impact on the market.
Overall, low interest rates are both appealing and rather addictive for most, aside from savers. It is important that we return interest rates to some sort of historical range to normalize the economy. In addition, it also provides the Fed with the tools necessary for when we do hit the next economic slowdown.