Rate Hike Fears Are Unwarranted
How often have we heard the phrase “if the Fed hikes rates too early, the economic recovery will be derailed”? It’s ingrained into the Fed’s mindset and statements like it appear frequently in the media. Yet the history of Fed rate hikes during prior economic expansions suggest that such fears are unwarranted, and the current 5 ½ year old expansion is on sound footing and would fare just fine and even be enhanced if the Fed began hiking rates. Normalizing interest rates should be welcomed, not feared by the Fed.
How often have we heard the phrase “if the Fed hikes rates too early, the economic recovery will be derailed”? It’s ingrained into the Fed’s mindset and statements like it appear frequently in the media. Yet the history of Fed rate hikes during prior economic expansions suggest that such fears are unwarranted, and the current 5 ½ year old expansion is on sound footing and would fare just fine and even be enhanced if the Fed began hiking rates. Normalizing interest rates should be welcomed, not feared by the Fed.
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