Interest rates are up, unemployment is down, but expectations are mixed.
The Federal Open Market Committee voted on Wednesday to raise its intraday rate by 25 basis points to a range of 1.0 percent to 1.25 percent, the third such rate hike since the global financial crisis.
Unlike previous rate hikes, the Fed’s decision follows a host of economic signals that were, at best, mixed, says Rob Waas, CEO and CIO of RSW Investments, a Summit, N.J. fixed income manager with more than $2 billion AUM.
“The Fed has to find pockets of strength to point to when they increase rates, but the ledger is stacking up against them pretty decidedly: personal income is weak, spending is weak, debt burdens are extraordinarily high, and the aging of our society and the decline in birth rates that we have seen is acting as a very strong headwind for growth,” Waas says.
Yet unemployment continues to decline, falling to 4.3 percent in May.