US rates won’t move a lot and it’s not going to matter

Terry Glomski, Senior Portfolio Manager at Neuberger Berman, manages a portfolio of fixed income investments. Keeping an eye on the outlook for interest rates is an essential part of his investment process. The Fed is facing a delicate balancing act in 2016, Glomski shares his views on how US rates could move. “The Fed thinks that we’re very close to full employment. And when you’re close to full employment and you keep the economy going by having lower interest rates you don’t create new jobs… you create inflation.” Glomski says the Fed is wary of inflation and wants to get ahead of it by raising rates. The issue is that while the ‘home turf’ looks ok, there are headwinds with anemic growth in Europe and a slowing Chinese economy. ‘Frankly, I think they are going to be extremely careful… Maybe they will go up a little bit, maybe they won’t. It’s not going to be a lot and it’s not going to matter.”