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Wilbur Ross: We'll Plunge Into Recession If Fed Doesn't Hike Rates Soon

Image: Wilbur Ross: We'll Plunge Into Recession If Fed Doesn't Hike Rates Soon

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By    |   Tuesday, 13 Sep 2016 03:23 PM

 

Billionaire investor Wilbur Ross thinks a rate hike by the Federal Reserve “is long overdue” and the longer the central bank risks plunging the nation into recession if it continues to dawdle.

“They ought to get on with it and get it over with,” he told Fox Business Network. “I think the worst part has been the dithering. They’ve made guessing what the next rate hike will be into an Olympic sport, and I think that’s totally unnecessary. If 25 basis points is all that’s keeping this economy together, we got nothing going,” he said.

The central bank last raised borrowing costs in December, ending seven years of near-zero rates. Policymakers signaled in June they could still hike rates twice in what remained of 2016.

Policymakers will go into next week's meeting divided, with some concerned current low rates will fuel a surge in inflation while another camp has argued that the Fed should not rush to raise rates.

Ross warns that is a dangerous strategy.

“If they don’t start raising it, the real problem will be the economy isn’t that great," he said. "Somewhere, probably in the next couple of years, we’ll go into a recession. If they’re still at these sub-low rates what are they going to use in their toolbox to fix things? We’ve learned negative interest rates don’t do a heck of a lot,” he said.

“I don’t see the signs of excess so far. I think the market's probably fairly fully valued, but you normally see big signs of excess. There’s no sub-prime wacky lending going on now,” he explained.

“The real estate boom is cooling in most parts of the country, at least big metropolitan areas. So I don’t see where the excesses are. You normally need to see signs of egregious excess to precipitate a major collapse,” he said.

Meanwhile, Republican Presidential candidate Donald Trump accused the Fed on Monday of keeping interest rates low because of political pressure from the Obama administration.

Minneapolis Fed President Neel Kashkari said "politics does not play a part" in the Fed's deliberations and that current low U.S. inflation means there is no "huge urgency" to hike.

Inflation has been below the Fed's 2 percent inflation target for the last four years.

An investor and businessman who made his billions advising bankruptcies and restructuring flailing companies, Ross was No. 20 in Newsmax's 100 Most Influential Business Leaders in America.

Ross is a force in the steel, coal, telecommunications, foreign investments, and textiles industries. He spent 25 years with Rothschild Inc.'s bankruptcy practice and then founded investment firm WL Ross in 2000. It was acquired by Invesco in 2006. He has spent the recent years turning around troubled banks, first the Bank of Ireland and then the Bank of Cyprus. 

Ross successfully bet on the Irish banking system when it was on the ropes. Ross is known for restructuring failed companies in industries such as steel, coal, telecommunications, foreign investment and textiles. As of June 2015, Forbes listed Ross’ net worth at $3 billion. 

Ross, who specializes in leveraged buyouts and distressed businesses, leads a group of investors who last year poured 1.3 billion euros ($1.47 billion), into Eurobank Ergasias, the third-largest bank in Greece, the New York Times said. 

(Newsmax wire services contributed to this report). 

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Billionaire investor Wilbur Ross thinks a rate hike by the Federal Reserve "is long overdue" and the longer the central bank risks plunging the nation into recession if it continues to dawdle.
wilbur ross, fed, rates, recesion
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2016-23-13
Tuesday, 13 Sep 2016 03:23 PM
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