Jason Thomas of The Carlyle Group published an interesting report yesterday on the Federal Reserve and the future course of interest rates. In a nutshell, the argument is that the Fed is likely to try to keep rates lower for longer than anyone is anticipating.
But the risk is whether an extended period of monetary stimulus will support an improving economy, or whether the market will adapt to a low-rate environment, raising the risk of greater damage to the economy in the future.
The decision in September by the Federal Open Market Committee to delay “tapering” the central bank’s bond purchasing program certainly seemed to catch the market by surprise. Indeed, Joseph Baratta, The Blackstone Group’s global head of private equity, warned last week at the Dow Jones Private Equity Analyst Conference in New York that we are in “an epic credit bubble” that could depress exit multiples by overinflating private company valuations.
On the other hand, in an economy that is blighted by slow growth and political mayhem, maybe we should gratefully accept our stimulus where we find it.
Thus, dear reader, our poll question for you: Does the Fed taper or does it not? And does the taper hurt or help?
This poll is now closed.
Steve Bills is a senior editor at Buyouts Magazine. Any opinions expressed here are entirely his own. Follow him on Twitter @Steve_Bills. Follow Buyouts tweets @Buyouts. For information on how to subscribe, contact Greg Winterton at firstname.lastname@example.org.
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