Fed's John Williams sees three, 'maybe even more', rate hikes in 2017

Adjust Comment Print

And it comes after expected rate hikes a year ago never materialized, over concerns the economy was still sluggish.

The interest rate investors receive on two-year bonds has increased from 1.20 percent to 1.32 percent, while the 10-year bond moved from 2.45 percent to 2.5 percent. And the Dow jumped the day of the rate increase.

The one-month Treasury rate, two years forward - a proxy for the Fed's terminal rate - has already discounted about five increases of 25 basis points over the next two years and remains nearly 30 basis points below the December highs, with inflation well-contained for now.

And if you're thinking this recent rate hike will give your savings a boost - not so fast.

It's just the third time since the Great Recession the agency's done so.

While promo executives anticipate that the rate rise won't negatively affect sales, the question remained whether the higher cost for cash could lead to a decrease in the mergers and acquisition activity that has been robust in the industry through the first quarter of 2017.

Earlier in the day, Evans stated that the Fed is on track to raise interest rates twice more this year and it could be more or less aggressive depending on inflation and fiscal policies from the Trump Administration.

"Therefore, theoretically, if interest rates keep going higher, there's no guarantee the investor will get all of his investment back", said Luschini, who oversees $4 billion in assets. "However, for companies in financial difficulty, rising interest rates might force or motivate them to sell". By making money more expensive (higher interest rates), economic expansion can often be kept in check.

If you're not sure whether your portfolio is ready for rising rates, schedule time to review your portfolio with your financial advisor today.

Rate rises have been a rare occurrence in the U.S. over the past 10 years. That's why investing in an actively managed strategy can be beneficial since they generally have the flexibility to adjust to different interest-rate environments and select specific investments with potential.

Higher US rates imply some downward pressure on the Australian dollar. Fixed income risks include credit, liquidity, call, duration, and interest-rate risk. That's pretty sound advice regardless of interest rates.