Interest Rate Hike Could Mean Inflation in 2017

December 15, 2016 10:25 AM

For the second time since the Great Recession in 2008, Federal Reserve officials have raised interest rates. Officials made the decision Wednesday, raising interest rates 0.25 percent.

On Market Rally Wednesday, guest host Ted Seifried of Zaner Ag Hedge discussed the decision with Mike Pearson of Market to Market. While Pearson wasn’t surprised with the rate hike, the way the dollar is trading is surprising to him.

“I thought maybe the dollar would start to sell off a little bit,” said Pearson.

Looking to the year ahead, Pearson thinks there could be some inflationary issues. Looking at President-elect Donald Trump’s cabinet picks, he said they are “business friendly” and there will be continued confidence in the U.S. economy.

“As those effects fill out and we have millennials move out of their parents’ basement and go out and buy cars and homes, buying things other than food at trendy restaurants, we’ll see more dollars coming into circulation,” said Pearson. “We’re going to have to raise that rate a tick faster than we have the last two years.”

Hear Pearson and Seifred’s thoughts on the “Trump market psychology” and locking in rates for long-term debt on Market Rally above.

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