Tags: Gross | Fed | rates | inflation

Gross: Fed Will Raise Rates Around Mid-Year

By    |   Thursday, 29 January 2015 09:38 AM

Earlier this month, star investor Bill Gross of Janus Capital Group said plunging oil prices would help keep the Federal Reserve from raising interest rates at least until late this year.

But now he's changing his tune. "I think the Fed will raise rates by 25 basis points sometime this year . . . around June," he told CNBC. That puts Gross in line with the consensus view.

"Their statement [Wednesday] indicates they still believe inflation will go back to relatively normal levels in the medium term, and they recognize the economy is stronger."

But that's not the main reason they will act, Gross noted. "The real reason, at least symbolically, is that even in the face of this low inflation, they recognize that zero percent interest rates are distorting capitalism," he explained.

"Zero percent interest rates are moving money into the financial sector for arbitrage profits, and very little of it is going into the real economy for investments."

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

"There's a necessity for savers and investors to receive a positive return on their money," Gross argued.

Sean Hyman, editor of two Newsmax newsletters, sees it a bit differently. "I don't think they will" increase rates soon, the editor of the Ultimate Wealth Report and Absolute Profits, told the "America's Forum" program on Newsmax TV

"With the strong dollar and a lot of these major companies blaming their softer earnings on the dollar, if they were to increase rates now, that could send the dollar even higher and make their earnings even worse in future quarters, which would take [stocks] down quite a bit," he said.

"I don't think they're going to increase now. That would probably either be later this year or even more than likely early next year."

© 2020 Newsmax Finance. All rights reserved.


   
1Like our page
2Share
Finance
Earlier this month, star investor Bill Gross of Janus Capital Group said plunging oil prices would help keep the Federal Reserve from raising interest rates at least until late this year.
Gross, Fed, rates, inflation
314
2015-38-29
Thursday, 29 January 2015 09:38 AM
Newsmax Media, Inc.
 
Newsmax TV Live

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved