After Federal Reserve Governor Lael Brainard signaled on Monday she is in no hurry to raise rates, financial markets celebrated as U.S. stocks surged on the view policymakers will keep massaging the economy.
Billionaire investor Wilbur Ross thinks that is a bad idea and explained why on the FOX Business Network.
“I think a rate increase is long overdue,” he said. “I agree with Jamie [Dimon]; they ought to get on with it and get it over with. I think the worst part has been the dithering. They’ve made guessing what the next rate hike will be into an Olympic sport, and I think that’s totally unnecessary. If 25 basis points is all that’s keeping this economy together, we got nothing going.”
On Monday Dimon said the Fed should raise rates “sooner rather than later” during an appearance at The Economic Club of Washington D.C.
Ross issued a warning as to what could happen to the U.S. economy if the Fed fails to increase interest rates soon.
“If they don’t start raising it, the real problem will be the economy isn’t that great," he said. "Somewhere, probably in the next couple of years, we’ll go into a recession. If they’re still at these sub-low rates what are they going to use in their toolbox to fix things? We’ve learned negative interest rates don’t do a heck of a lot.”
When asked whether he sees an overall market collapse coming, Ross said:
“I don’t see the signs of excess so far. I think the market's probably fairly fully valued, but you normally see big signs of excess. There’s no sub-prime wacky lending going on now. The real estate boom is cooling in most parts of the country, at least big metropolitan areas. So I don’t see where the excesses are. You normally need to see signs of egregious excess to precipitate a major collapse.”