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Fed Holds Course

By Matthew Kerkhoff

 

The Fed chose to err on the side of caution, and when all is said and done, it will be viewed as the right decision. Don’t mind the market reaction for now, soon investors will come around to see the Fed’s prudence in a positive light, and recognize that the central bank is actually paying attention.

 

Last week I laid out the arguments in favor of a rate hike and those against. While both sides can make a compelling case, there simply was no dire need to raise rates, and doing so had a negative risk-return tradeoff.

 

Market psychology had come around to the notion that a rate hike would imply confidence in the U.S. economy. The first rate hike has been telegraphed for so long now that many investors simply want to get it over with. While these investors did not get what they wanted, and are selling stocks today, ... Log in or subscribe to continue reading.


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