Why the Fed’s Rate Increase is Good (Not Bad) News
The Federal Reserve's (Fed) widely anticipated decision this week to raise interest rates for the first time in nearly a decade has garnered plenty of attention, especially from those concerned over the possible negative economic impact of rate increases. However, I think such concerns are largely misguided. In my view, the Fed made the right move for the economy and markets ( even if it came a bit late ). Here are five reasons why:
1. Rate Normalization Will Happen SlowlyThe Fed's New Path the hiking cycle to be gradual numerous factors beyond the Fed also keeping a lid on rates
2. The Uncertainty is Overamid persistently easy policy many corporations delayed committing capital until they had more clarity
3. The Rate Curve Will Start Looking Normal Againsavers have been subsidizing borrowers for far too long
4. Financial Markets and the Economy Look Different Today Than in the Pasttechnological innovation shifting demographic trends
5. Excessively Low Rates Were the Bad Newsexisting negatives witnessed from keeping rates excessively low for too long the economy has actually been doing better than many headline numbers would imply while the Fed waited Rick Rieder , Managing Director, is BlackRock's Chief Investment Officer of Fundamental Fixed Income, Co-head of Americas Fixed Income, and is a regular contributor to The Blog .
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