Tags: Greifeld | Fed | raise | rates

Nasdaq CEO Greifeld: Fed Must Be Careful Not to Raise Rates Prematurely

By    |   Monday, 12 January 2015 03:01 PM

Many inflation hawks want the Federal Reserve to begin raising interest rates sooner rather than later, but Robert Greifeld, CEO of Nasdaq OMX Group, warns the Fed against moving too quickly.

Many economists expect the Fed to begin the increases around mid-year. Fed Chair Janet Yellen said last month that the Fed probably won't act before April.

As for Greifeld, "moving too quickly, amid persistent signs of global economic trouble, could have a damaging effect on economic growth and investors by sending stock and bond markets into turmoil," he writes in The Wall Street Journal.

"Continued caution on U.S. interest rates is the right path. With persistent uncertainty in the global economy, we cannot afford additional economic stress that causes further retrenchment of the investing public."

While the U.S. economic growth soared 5 percent annualized in the third quarter, the eurozone expanded only 0.6 percent, Japan shrank 1.9 percent and China registered growth of 7.3 percent, its lowest rate in five years.

"The downside risk of waiting is more manageable. In other words, the Fed should be late to the rate-raising party," Greifeld explains.

"The Federal Reserve can continue to play a part in America's long road to normalcy by undertaking a careful, methodical program of monetary change to ensure a seamless transition from a near-zero interest rate policy to a normal rate level, reflective of the current, global economic conditions. The Fed should not put investor confidence at risk by raising rates prematurely."

Meanwhile, ex-Fed Chairman Ben Bernanke said in a speech to the National Retail Federation Monday that the retail sector has nothing to fear from impending rate increases by the Fed, The (New Jersey) Record reports. Presumably that would apply to the rest of the economy too.

Indeed, "when the interest rate starts to rise, that's going to be good news," Bernanke maintains. "It means the economy is strong enough to sustain it."

The Fed has kept its federal funds rate target at a record low of zero to 0.25 percent for six years.

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Many inflation hawks want the Federal Reserve to begin raising interest rates sooner rather than later, but Robert Greifeld, CEO of Nasdaq OMX Group, warns the Fed against moving too quickly.
Greifeld, Fed, raise, rates
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2015-01-12
Monday, 12 January 2015 03:01 PM
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