Tags: ron insana | fed | rates | terrorism

Ron Insana: Fed Would Be Crazy to Raise Rates Now Amid Global Terrorism, Recession

Ron Insana: Fed Would Be Crazy to Raise Rates Now Amid Global Terrorism, Recession
Ron Insana (roninsana.com)

By    |   Wednesday, 18 November 2015 07:00 AM

The Federal Reserve “would be ill-advised to begin normalizing interest rates in December” amid the Paris terroist attacks, Japan's re-emergent recession, the continued crash in commodities and the softness in U.S. economic data, warns Ron Insana, a CNBC and MSNBC contributor.

"While no one, myself included, would like to see rates at zero forever, given what that implies about the state of the global economy, the Fed must deal with the world as it is, not as it wishes it to be," Insana, the author of four books on Wall Street, wrote on CNBC.com.

"At this tender moment, the world is neither safe, nor economically secure. This not the moment to test the resilience of the economy, this is a moment to protect the gains that have thus far been made," he wrote.

"Evidence had already been mounting that global growth is slowing further, deflationary pressures are accelerating and global markets are reacting negatively to the strong hints from Fed officials that a rate hike in December appears to be a near-certainty," he wrote.

"I am keenly aware of the Fed's desire to get off the zero line to ensure that it has some ammunition to fight the next financial crisis, or the next recession. However, that type of reasoning is similar to a doctor infecting someone with the flu with the intent of fending off pneumonia. One is clearly worse than the other, but the first can easily lead to the second," he wrote.

"And, while a "small" rate hike should be easily absorbed by the U.S. market and economy, there are pockets of risk that could be shocked by even the slightest change in policy," he wrote.

"Further, the markets, unless given strict assurances by the Fed to the contrary, would likely begin to price in a series of rate hikes, which could lead to unintended market and economic consequences."

Insana isn't the only one to sound the alarm about Fed rate hikes.

Peter Schiff, CEO of Euro Pacific Capital, warned that the markets won’t be able to handle a Federal Reserve rate hike.

“Since we have had the monetary wind at our back for so many years, at least a few have begun to question our ability to make economic and financial gains against actual headwinds. But in reality, the tightening cycle that the forecasters are waiting for actually started last year,” he wrote. “Sadly, the markets and the economy are already showing an inability to handle it,” he wrote.

Donald Trump warned that “a lot of bad things can happen,” such as a recession, when the nation’s central bank finally hikes interest rates, which he alleges have been kept low for so long for political reasons.

The Federal Reserve already should have raised interest rates from the very low levels set during the Great Recession, and he suspects Fed Chair Janet Yellen has delayed doing it for political reasons, USA Today reported.

"When you raise interest rates, I think a lot of bad things can happen, in terms of recession, everything else," he told the newspaper, suggesting she wants to wait until the next president is poised to take over.


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The Federal Reserve "would be ill-advised to begin normalizing interest rates in December" amid the Paris terroist attacks, Japan's re-emergent recession, the continued crash in commodities and the softness in U.S. economic data, warns Ron Insana.
ron insana, fed, rates, terrorism
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2015-00-18
Wednesday, 18 November 2015 07:00 AM
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