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Why focusing on the Fed is foolish: Jeff Macke

Yahoo Finance
Yahoo Finance

Federal Reserve Chair Janet Yellen delivers the central bank's semi-annual report on monetary policy Tuesday to the Senate Banking Committee. Lawmakers and Fed watchers are waiting to see if Yellen will give any clues as to when the Fed will start raising short-term interest rates, which have been near zero since December 2008. Last week Fed officials said they would stop buying bonds in October, a promising sign that the Fed has confidence in the economic recovery.

Yet some economists and financial pundits argue that the Fed should halt its stimulus measures more quickly. They cite a strengthening economy and rising inflation (which is still below the Fed's target of 2%). The federal unemployment rate has fallen to 6.1% and U.S. employers added 288,000 jobs in June. Job growth has averaged 272,000 per month over the past three months, according to the Labor Department.

Yahoo Finance's Jeff Macke argues in the video above that investors and business analysts should stop debating whether or not the economic recovery exists and focus instead on what can be done to enhance the recovery in the coming years. As for interest rates, "The Fed has never been more clear about where they're going to set rates," he says. Investors should be long equities until a rate decision is made, he adds.

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