Name: Here's What You Need to Know About the Fed's Interest Rate Hike
Uploaded: 2015-12-18
Duration: 2 min 24 s
Description: What happens next is what really matters.

Here's What You Need to Know About the Fed's Interest Rate Hike

What happens next is what really matters.

mhm. It happened. The Fed raised interest rates for the first time in nine years, and we are all still here. It was remarkably, you know, the market was up, Alan. You called it a sigh of relief. What most of the people who were watching you right now it means nothing, right? It's not going to increase the earnings that old people get on their savings. It's not going to cut interest rates on anything that any of us pay. I think it's just it's a turning point. But you know, the feds plan is to do this four more times over the course of the year, and then it begins to really matter. And so I think I think this would be seen as an inflection point, but it's going to take a while before we really understand what the effects are. Erin, do you think the bar was really high to make this hike? So do you think that that will hold true again the next time? Or do you think this is going to become a little more room? Yeah, I think it's their plan to do this once a quarter for the next four quarters But the day after and the day after, two days after the Fed hike, the market went down pretty hard and real interest rates fell and commodity prices continue to go down. Which is the market's way of telling you, maybe the Fed is gonna help trip us into a recession or more of a slowdown in the global economy, not exactly going gangbusters. And so I think it's going to be there going to be hard pressed to do more of this, even though even at 50 basis points, even at 100 basis points, the Fed funds rate would still be historically low. And Lee, the big unanswered question here is We've had these seven years of zero interest rates and extraordinary experiment in monetary policy. We know we know it will have unintended side effects. We just don't know what they are Very true. That's really the thing to watch for over the next few years. How are the bad effects of this incredible experiment we've had for the last seven years going to play out something to wash? In other news in Washington, we have a budget deal, a Christmas gift wrapped in a nice big bow Alan. There's some reason for business to be pretty happy about some of what some of the things they want. The Exim Bank survives. They got the R and D tax credit. I think business is just going to be happy about the fact that Congress was actually to do this. You know, I think big kudos to Paul. It's not like there's a big deal, by the way. I mean, this is a one year extension without any major changes, But I think Paul Ryan deserves credit for making it happen. It's a It's a certainly better tone than we've seen for many years in college. It's time for sure.