Summary: Are Investors Ready For Higher Interest Rates?

The article "Are Investors Ready For Higher Interest Rates" discusses which direction interest rates are headed as the U.S. economy continues to grow. U.S. GDP grew by 3.5% last quarter and 10 year Treasury bonds also rose from .8% to 3.5%. According to Villanova business professor Victor Li, "At some the point the Fed needs to think about tightening monetary policy," because he believes that such low rates can overheat the economy, spark inflation and devalue the U.S. dollar. The Fed has not given many clues on what they plan to do, but there are many different opinions. Some believe the Fed will be forced to raise rates very soon, while others think the Fed will keep rates steady for many months or even years. The differing opinions are caused by different beliefs in how fast the economy will recover from the current depression. The article points to the fact that the Fed is walking a very fine line when considering interest rates because it needs to make clear that it is taking the threat seriously, at the same time it needs to make sure it does not end economic growth before it even starts. In the end it will be a wait-and-see approach, as the Fed's action will most likely follow the economy and the financial markets.