Fed Raises Questions, not Rates.

Blake Street, CFP®
Chief Investment Officer
Warren Street Wealth Advisors

If not now, when?

Yesterday, the Federal Open Market Committee opted to keep interest rates in check. Lower oil, a stronger dollar, and the Chinese slowdown all play into a weak global inflation picture that gave the Federal Reserve pause. 13 of 17 FOMC participants still think its appropriate to raise rates this year. Federal Reserve Dove’s (aggressive monetary policy) continue to dominate Hawks (restrictive). Global growth is still well below central bank targets (see below). Even if rates rise this year, we expect a slow and steady trajectory.

Doves vs Hawks

A common misconception that rates have nowhere to go but up, and fast, has been countered once again. While rising rates are a viable concern for any investor, especially in fixed income and high dividend yielding stocks, it is important to understand the broader role these positions play in diversification. In addition, rates are determined by market forces, not just a Federal Reserve decision and if global growth appears anemic, investors will continue to settle for low yields in return for protection of principal.

One practical application for how to use lower rates to improve your position is how rising rates may impact lump-sum pension payouts and your own personal retirement timeline, as well refinancing your own personal debt. Restructuring liabilities like mortgages, credit cards, and auto loans can free up cash flow for growth and savings opportunities.

As always, we are here to help. Let us know how we can be of service.

Respectfully yours,

Blake Street, CFP®

Blake Street is an Investment Advisor Representative of Warren Street Wealth Advisors, a Registered Investment Advisor. The information posted here represents his opinions and is not meant as personal or actionable advice to any individual, corporation, or other entity. Any investments discussed carry unique risks and should be carefully considered and reviewed by you and your financial professional.  Nothing in this commentary is a solicitation to buy, or sell, any securities, or an attempt to furnish personal investment advice. We may hold securities referenced in the blog and due to the static nature of content, those securities held may change over time and trades may be contrary to outdated posts.