Investors “will they, won’t they?” approach to a hike in interest rates by the Federal Reserve looks set to come to an end, with a strong indication that December will mark the date of lift off.
Nigel Green, chief executive officer and founder of financial advisory firm deVere, believes that strong economic data coming from the US means that the Fed will raise interest rates for the first time in nine years next month.
Stronger than expected U.S. employment data in October fuelled expectation that a move from near-zero rates will take place next month. The world's largest economy added more than a quarter of a million jobs in October.
Green says that although a potential rate hike has been the source of much rumour and speculation for most of 2015, a 2.5% wage increase and robust job numbers means that his firm is “as confident as can be” that the Fed will tighten next month.
“Holding rates at near-zero is increasingly unjustifiable and it would be hard to think of a better time than now to raise them, given the economic situation. Plus a 0.25 per cent rise now is a better way forward than having to raise rates higher and faster later,” says Green.
He adds that no one can be sure how markets will react to an increase in interest rates as it has been almost a decade since the last hike.
“An experienced fund manager will be invaluable in selecting the right funds at the right time to take advantage of the opportunities,” says Green.
©2015 funds europe