Tags: Jim Rogers | Fed | Interest Rate Hike | Oil

Jim Rogers: Rate Hike to Have Little Benefit, Will Drive Oil Down

Jim Rogers: Rate Hike to Have Little Benefit, Will Drive Oil Down
Jim Rogers (AP)

By    |   Thursday, 17 December 2015 08:31 AM

The Federal Reserve's rate hike could overprice the dollar and push oil prices even lower, while producing little benefit for the U.S. economy, according to international investor Jim Rogers.

The Fed on Wednesday lifted its key interest rate by a quarter point to a range of 0.25 to 0.5 percent, up from near zero for the first time since December 2008.

The result of the rate hike may be temporary, as it is not expected to boost the U.S. economy, while making the US dollar overvalued. The result may be competing currencies, if the dollar is unable to hold up, Rogers told Sputnik.

"It's already had an impact on commodity markets, we've all known that interest rates would be going higher," he said. "Commodities are down very dramatically in some cases over the last three or four years, so the first or second interest rate rise could probably make the bottom of commodity markets," Rogers said.

Rogers explained that the rate hike is relatively insignificant.

To be sure, Fed policymakers have slightly lowered their projections for short-term interest rates over the next three years, a sign that policymakers may move slowly after their first rate increase in seven years, the AP reported.

More Fed policymakers now expect the short-term rate will be 1.38 percent or below at the end of 2016 than in previous projections in September. And they forecast the rate will be 2.38 percent at the end of 2017 and 3.25 percent at the end of 2018, both a quarter-point lower than in September, according to projections released Wednesday.

Still, the Fed's forecasts for the U.S. economy and interest rates have proven too optimistic for most of the recovery from the Great Recession. A year ago, for example, their projection for short-term rates at the end of 2016 was nearly double what it is now.

Peter Schiff, CEO of Euro Pacific Capital, warns investors not to believe the hype that the Federal Reserve’s interest-rate hike reflects confidence in a strengthening economy.

No, just the opposite, he told Newsmax TV.

“The next recession is about to begin and there's a good chance that it's already here or it will begin early in 2017,” he told Newsmax TV’s “The Hard Line.”

“The only reason the Fed is raising rates is to try to show that they have confidence in the economy, but the reality is they have no confidence in the economy and they're trying to cover up those fears with this symbolic rate hike. But they're going to have to figure out how to reverse course unfortunately. They're going to be doing QE4 next year, they're not going to be raising rates again,” he said.

(Newsmax wire services contributed to this report).

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The Federal Reserve funds rate hike could overprice the dollar, while producing little benefit for the US economy, according to investor Jim Rogers.
Jim Rogers, Fed, Interest Rate Hike, Oil
Thursday, 17 December 2015 08:31 AM
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