The Federal Reserve’s decision this month not to raise interest rates had only a slight effect on the markets. Mike Sherzan is an Iowa broker who says observers didn’t really expect the rates to go up, but were watching closely for guidance from the “Fed.” He says the market appreciated learning that the fed’s going to “manage” the upward move of interest rates when it does begin — even though that’s not something that’s going to happen soon. Sherzan says seeing that deliberate movement, markets reacted “nonchalantly” to the fed’s decision, with little movement up or down. From the perspective of an investment advisor or broker, you don’t want any “wild” fluctuation in interest rates, either direction, and he says they won’t mind if the rates stabilize and don’t move up dramatically. If the economy keeps growing — which Sherzan says it will — the fed will have to take action to hold down the speed of the rebound. Right how, stable interest rates are helping economic growth, as Sherzan says raising interest rates will mean “the cost of money goes up,” it costs more to borrow money and it will slow economic activity. While low interest rates are a good thing for borrowers hoping to buy a home or car, they’re not so good for others.If you’re 60 years old, say, and living on the income from your CDs, bonds or other investments, you’d like to see your returns go higher.
