The looming news about a federal interest rate hike might sound discouraging to some, but one local investment professional says it’s actually a positive sign.
“Generally speaking, the increase is a good sign for the economy,” said Bob Willis, CEO and chief investment officer at Willis Investment Counsel in Gainesville. “It means the federal government feels the economy no longer needs a crutch. When the Fed starts raising rates, that’s not something they’ll do unless they think the economy is sufficiently strong to absorb that increase.”
A solid November job gain of 211,000 across the country showed that despite weak overseas growth and struggling U.S. factories, the U.S. economy appears healthy enough to withstand a Fed hike from record-low rates. It would be the first time in seven years the Fed has raised key interest rates.
In addition, average long-term U.S. mortgage rates edged higher last week following three straight weeks of declines, amid expectations that the Federal Reserve will possibly raise the interest rates this week.
“The medicine the federal reserve uses when the patient — meaning, the economy — is sick, is lowering interest rates to stimulate the economy,” Willis said. “The Great Recession and financial crisis of 2008-09 was so severe that it took extraordinary measures … when the economy is weak, you lower interest rates.”
Willis Investment Counsel manages about $1.6 billion in assets for clients across the country. It’s the state’s largest independent investment management firm north of metro Atlanta.
The Associated Press contributed to this report.