Tags: Investors | Federal Reserve | interest rates | economy

Poll: 56 Percent of Investors Think Fed Will Raise Rates in Next 12 Months

By    |   Sunday, 29 March 2015 06:42 PM


Economists' consensus forecast is that the Federal Reserve will begin raising interest rates in September. And the investing public isn't too far off that view, according to a Wells Fargo/Gallup survey.

The poll, conducted Jan. 30-Feb. 9, found that 56 percent of investors with portfolios of $10,000 or more expect the Fed to begin raising rates within the next 12 months. A total of 51 percent see rates rising a little, and 5 percent see them rising a lot.

The Fed has kept its federal funds rate target at a record low of zero to 0.25 percent since December 2008.

A total of 34 percent of investors think rates will stay the same for the next year, while 7 percent predict they will rise a little.

If interest rates do increase during the period, 23 percent of investors said they are likely to move money out of stocks and into more conservative investments, while 76 percent said they're not.

Meanwhile, anyone receiving interest payments over the last seven years undoubtedly has noticed their shrinkage. And the Fed's massive easing program is responsible for much of that shrinkage.

A study by Swiss Reinsurance, the world's second largest reinsurer, seeks to quantify the damage. "Since the global financial crisis, U.S. savers alone have lost a whopping $470 billion in interest rate income, net of lower debt costs,"states a study by the firm.

"This is just one upshot of central banks' unconventional monetary policies initially enacted to manage the crisis."

In addition to low rates, the Fed's balance sheet has ballooned to $4.5 trillion through multiple quantitative easing operations.

The authors have no bone to pick with central bank stimulus immediately after last decade's credit meltdown. "Policymakers did a commendable job of managing the 2007-2008 financial crisis," the report says.

"Their creative use of unorthodox monetary policies stabilized financial markets and restored economic confidence. But seven years later, the unconventional is becoming the norm."

The ramifications aren't pretty. "This current state of financial repression brings with it a whole host of unintended consequences: asset price bubbles, an impaired credit intermediation channel and increasing economic inequality are just a few," the report says.

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Economists' consensus forecast is that the Federal Reserve will begin raising interest rates in September. And the investing public isn't too far off that view, according to a Wells Fargo/Gallup survey.
Investors, Federal Reserve, interest rates, economy
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2015-42-29
Sunday, 29 March 2015 06:42 PM
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