Why You Can Ignore the Upcoming Fed Meeting

Get used to low rates this summer ... and perhaps longer

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The U.S. Federal Reserve will be discussing the economy, inflation and the prospect of raising interest rates at its next FOMC meeting in a few days, on Tuesday, June 14, and Wednesday, June 15.

But while minutes from previous Fed discussions in April had fueled speculation about an interest rate hike, the odds of a rate hike have been dropping in recent weeks and are now almost zero.

That’s not surprising. After a disappointing May jobs report and data that shows inflation rates remain pretty low, it’s hard to justify tighter monetary policy.

Also, negative rates are the rule elsewhere in the world. Consider that the Bank of Japan adopted negative interest rates in January, a year and a half after the European Central Bank went negative. Consider that central banks from Hungary to India to Turkey to Indonesia have all cut rates in the past two months or so.

Of course, there are plenty out there who claim that low interest rates are unsustainable both in the U.S. and elsewhere in the world. But keep in mind that rates have been rock-bottom since 2008 in the U.S., and that Japan has kept rates super-low since the mid-1990s. Remember this before you talk about how the end of low rates is imminent.

So, in a nutshell: Don’t sweat the June Fed meeting. It likely wasn’t going to implement a rate hike before, and it certainly won’t after the May jobs numbers.

Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP. As of this writing, he did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2016/06/interest-rates-federal-reserve/.

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