It is very interesting to watch the once ferocious markets hate a possible interest rate increase, only now to greet it like family.
Interest Rate Increase Today
It is highly likely the FOMC (Federal Open Market Committee) led by Janet Yellen will raise short term interest rates up to the 1% threshold at their announcement later today. What is more interesting is just a few quarters ago even a whiff of a raise threw the capital markets into a tailspin.
Past rate increase events:
- The US Dollar soared as other countries across the world continued to push their rates down.
- US Capital Markets threw a temper tantrum in dispute of a raise.
- Headlines beamed with fear of the crazy FOMC raising rates.
Probably our favorite chart from our friends at JPMorgan- higher rates can be a good thing
There will be a day that it does matter. Rates can go too far which results in an inverted yield curve (short term rates are higher than long). For now it seems everyone is on the same page and digestion of higher rates is occurring.
Have a Great “Higher Short Term Interest Rate” Day!
John A. Kvale CFA, CFP