FSU experts on interest rates, investments and the economy

Regarding the Fed's recent move to increase its federal funds rate – the rate at which banks borrow and lend to one another overnight, the College of Business has two experts to discuss interest rates, investments and the economy.

William Christiansen (wchristiansen@business.fsu.edu), the Truist Associate Professor of Finance and longtime chair of the Department of Finance in the College of Business, has published articles on macroeconomic policy and economic performance issues, among various expertise. After the Fed's March rate increase, he said the central bank's objective was to "lower inflationary pressures without causing extreme slowing in the economy. It's very challenging in the current environment."

After news of the Federal Reserve increasing its federal funds rate, Christiansen said the rate-setting Federal Market Open Committee "had to take a very strong position for the economy and for the markets. We need to slow down inflation. What we should note is that this likely will slow down the economy and likely will bring down inflation as caused by overheating, or the demand side, but we still have a problem with the supply side and the supply-chain stress that we are feeling, because it as a global measure. The Fed can't do much about that."

Steven Perfect (sperfect@business.fsu.edu), an associate professor in the Department of Finance, can discuss the effects of rate increases on investments. He has published various articles in refereed academic journals, including Financial Management, the Financial Analysts Journal, the Journal of Banking and Finance, the Journal of Derivatives and the Journal of Empirical Finance. Before returning to academia, he directed option trading, quantitative analysis and risk analytics for energy companies.

Perfect said Wednesday's action was "pretty fully priced into valuations over the past several days" and that "stock values may consolidate in the near term as the market evaluates the seriousness of the Fed in combatting inflation. The Fed will attempt to thread the needle on reigning in inflation while not slamming economic growth. Past experience is not very comforting when judging their likely success, but we can always hold out hope."