No Reason to Fear Fed Rate Hikes

How often have we heard the phrase “if the Fed hikes rates too early, the economic recovery will be derailed”? It is ingrained into the Fed’s mindset and similar statements appear frequently. Yet the history of Fed rate hikes during prior economic expansions suggests that such fears are unwarranted, and the current five-year old expansion would fare just fine and even be enhanced if the Fed began hiking rates. Normalizing interest rates should be welcomed, not feared by the Fed.