Only a few weeks ago the Federal Reserve forecast that US base rates would rise three times within the next 12 months. While many investors seem to take these forecasts with a pinch of salt, a number of high-profile bankers seem to be backing this move by the Fed. So, do markets trust the Fed to deliver on its interest rate policy? Read full article
I don't think anyone should be overly trusting or dependent upon fed policy - whether they raise slowly as expected, continue to squash rates, or ever decide to jack rates up suddenly and unexpectedly... At the same time, one shouldn't try to fight the fed. But I try to be prepared for whatever may happen - I'm never 100% or more long, I'm never too heavily leveraged, never too heavily short, always have some cash on hand, use some hedging on more volatile securities, etc.
In the recent past the Fed and the Bank of England tried to push market expectations in a certain direction only for things to change which made them look really foolish. We are in an environment which we will never experience again in our life times so it is hard to put your neck on the line.
