No panic as Fed gets set for rate hike
Investors still upbeat as result of proposed economic reforms.
For years after the recession officially ended, investors fretted over the prospect that the Federal Reserve might begin to raise interest rates from record lows.
Now, the Fed seems all but sure to raise rates Wednesday for the third time in 15 months and to signal more hikes probably coming — and the response from investors has been something akin to a yawn.
Wall Street appears too busy extending the stock market rally that began with President Donald Trump’s election in November, cheered by the prospect of tax cuts, an easing of regulations and higher spending for infrastructure to worry about a rate hike.
Fed watchers, it seems, are more buoyed by expectations for a vigorous economy than worried about whether slightly higher rates might slow growth.
When Chair Janet Yellen and several other Fed officials separately suggested earlier this month that the economy was sturdy enough to withstand a modest raising of loan rates, investors quickly raised their estimate of the probability of a rate hike at the Fed’s meeting this week from around 20 percent to 80 percent.
After Friday’s robust February jobs report — 235,000 added jobs, solid pay gains and a dip in the unemployment rate to 4.7 percent — the likelihood has grown to 91 percent, according to the CME Group, which tracks investor