Speaking during PA Summer Congress 2015, Warwick said that markets have been nervous, especially following the disappointing DGP numbers released in the first quarter, but recent data has been so incredibly strong that they will have to begin to raise rates.
“It is actually creating a negative impact in terms of corporate and investor behaviour now,” he said, “You can’t really have rates at zero when the economy is performing so well.”
But, he added: “The fed will be way below and behind inflation and they will do so deliberately and the moment they get any whiff that it is having a negative impact on the economy they will hold steady and make sure the economy is stable.”
However, Warwick adds, he does not expect rates to get up much beyond the 2% to 2.5% mark.
“I just don’t see the days of 6, 7, 8% interest rates in the western world coming back for many years,” he added.
