What to expect as the Fed gets ready to raise interest rates
David Kotok joins Yahoo Finance to discuss Fed moves, rate hikes & U.S. economy, and the outlook for the market.
Mon, February 14, 2022, 10:58 AM
David R. Kotok, Cumberland Advisors' CIO & Chairman, was asked by Yahoo Finance, “How concerned are you that the Fed front loads these interest rate hikes and what impact do you think that will have on the economy this year?”
David responded, “I hope they don't front load the Jim Bullard warning which created a lot of turmoil in the market. It’s less likely in my opinion to happen. I believe the majority of the members of the Federal Open Market Committee know that moving policy should be like moving a battleship, not a speedboat. And so I don't expect front loading. My biggest concern, Brian, is the balance sheet shrinkage because the Fed has only done that once and their record about it is poor. I’m okay with four or five rate hikes, get the short-term interest rate up to 1%. Let money markets start to clear. Let people get away from the zero bound. Let them earn something on savings. I think that would stabilize a lot of issues. It's the balance sheet shrinkage that is the unknown, and it's way out in the future but it may come at us fast. I hope it doesn't.”
The conversation with David and Yahoo Finance continues to discuss the Fed's next moves, what rate hikes will do for the U.S. economy, and the outlook for the market here: https://finance.yahoo.com/video/expect-fed-gets-ready-raise-155833436.html
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Cumberland Advisors Market Commentaries offer insights and analysis on upcoming, important economic issues that potentially impact global financial markets. Our team shares their thinking on global economic developments, market news and other factors that often influence investment opportunities and strategies.