No panic as Fed gets set for rate hike

In­vestors still up­beat as re­sult of pro­posed eco­nomic re­forms.

Austin American-Statesman - - BUSINESS - In­ter­est rates

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

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