So is this really it: the end of the era of virtually zero interest rates? There was a marked pullback in US markets on Wednesday when Jay Powell, the chair of the Federal Reserve, indicated that yes, he really did mean it: interest rates are on the way up, if not quite yet. ‘The committee is of a mind to raise the federal funds rate at the March meeting assuming that conditions are appropriate for doing so.’ Share prices, which earlier in the day had risen in expectation of a doveish stance, fell back sharply. The very idea that a central bank might increase interest rates to tackle rising inflation seemed to catch investors unaware – so used have we all become to ultra-low borrowing rates.
Central bankers act like boozers who say they will give up drinking tomorrow, but come the day there is always a reason to have another
But I’m not sure I would really want to bet on rates rising in March.
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