Friday, December 5, 2014

Interest Rates to Rise

Sometime. Sometime, in the future, interest rates will rise.

The Job Numbers today, raise the topic of the Fed and raising of short term interest rates in a move to get away from the negative real rate in effect.

The Fed may need to make a move to satisfy their need for credibility. Their statements have been to the effect that they will be "data dependent".

Well, we have the data.

What will the reaction of the stock market to a rise in rates be? I don't know. But looking farther out the reaction of the general economy to a rise in rates may be the same as the reaction of consumers to rising prices. They buy more because the price may be higher later.

It may be that as interest rates begin to rise they will stimulate pent up demand.

Just a thought.


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