9 May 2014

the US economy, the Fed and interest rates

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With the US economy on the mend, the focus will likely soon shift to when the Fed will start to raise interest rates. This could cause some volatility in shares.

  •    However, a Fed rate hike is probably still a year away at this stage and history tells us that it’s only when rates reach onerous levels that they become a real threat to share markets and ultimately economic growth.
  •    Steady progress towards eventual rate hikes in the US will further relieve pressure on the $A over time.

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The author is an employee of Verante Financial Planning in Castle Hill, Corporate Authorised Representative of Magnitude Group Limited, Licence No 221557, Magnitude Group Limited ABN 54 086 266 202.