Are Investors Ready for Higher Interest Rates?

Are investors ready for higher interest rates? The U.S. domestic product report that was released on October 29 showed that the economy grew by 3.5% last quarter. Treasury process fell after the release of the GDP figure. The Fed’s open market committee said in a statement “economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period.” Jeff Kleintop believes that the Fed could start raising the rates in 2010. His reasoning comes from the fed and how they have pumped trillion of dollars into the financial system. A recovery will push the money into the economy and this he believes will spike inflation. The direction of interest rates can have a big effect on investors. Low rates have benefited the financial sector and this has helped banks to begin recovering from the huge losses during the recession. Interest rate outlook depends on where the economy is headed.