The Federal Reserve could announce this week that they will start to slowly taper off what they’ve been doing for the past few years. That is, pumping $85 billion dollars a month into financial markets. The experts say it could have an impact on your future, especially if you are approaching retirement.
“Stock prices will go down at first. That affects everybody’s pension plans and retirement savings,” economist Ray Perryman told KTRH.
Financial planner Richard Rosso says everyone will be affected at first.
“If interest rates get out of control and start to spike it’s going to cost you more to buy things that you want to buy,” he explained.
Perryman says he's not so sure that this is the right time for the Fed to do this. And Rosso agrees.
“What the Fed is trying to do is get the market and the economy away from this addiction of an artificial stimulus,” Rosso explained.
The thing is, what the Fed has been doing was never supposed to be a permanent thing, and Perryman says at some point tapering off has to happen
“It’s painful medicine, but it’s medicine we have to take. The sooner, the better,” Perryman stated.
But Rosso says the Fed could surprise us.
“I must be the one of the only people who thinks the Fed is not going to taper here. That’s based on where housing numbers are and the weakness of the recovery,” Rosso explained.
Perryman says if the Fed postpones the tapering, it wouldn’t be a bad thing.
“It wouldn’t shock me if they put it off for a couple of months, but it’s going to happen at some point; either at this meeting or the next one,” Perryman stated.
Perryman says, however, that he wouldn't mind seeing the Fed hold off for a couple of months.