Blinder: Fed Will Raise Rates Very Slowly

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Aug. 22 (Bloomberg) -- Former Federal Reserve Vice Chairman Alan Blinder comments on how the markets may react to Fed rate hikes. He speaks with Mike McKee in Jackson Hole, Wyoming. (Source: Bloomberg)

That should make her change that.

So steady as she goes.

Our michael mckee joins us now from jackson hole.

Mike, mr.

Blinder indicated there is no reason for janet yellen to change her messaging, but we know jackson hole has a history of preceding policy changes by the fed.

Yeah, they would like to get away from that.

This has always been a more academic conference.

They got away from that during the bernanke years.

A lot of the bernanke years during the great recession.

They would like to get back to the idea discussing things at a 10,000 foot level.

It is ironic.

I talked with alan blinder last night about the economy and he said the one thing that could derail it is events overseas, and look at what is happening with ukraine this morning, effecting markets even before janet yellen speaks.

If that goes away, i asked him then how does the fed affect the markets.

That will be the key question going forward.

Here is what he had to say -- nobody should expect that when lift up comes and he said funds rates come off of zero, let's just say sometimes in the first half of 4015, that the fed is going to be having the interest rates skyrocket.

It is going to be -- first half of 2015, that the fed is going to be having the interest rates skyrocket.

It is going to move slowly.

If that happens, the fed is going to slow down the game.

It is going to start telling the markets in words and by actions we are not going that fast.

If you want to hang out there on a limb and get your portfolio chopped off, that is your business.

So i asked alan, what do you do as an investor, and he said he think they love people are going to go to cash and wait out the volatility, guys.

Wait out the volatility.

That means less participation.

You mentioned it its overseas how alan blinder mentioned that would e-mail the economy.

What are you hearing about their concerns on androgynous stocks such as ukraine, such as iraq?

They say basically there is nothing you can do about it.

You know it is out there, you cannot really plan for it, and you cannot really plan for a reaction to it except to be aware that it could happen.

Other than that, they see the economy on a pretty good pass at this point.

There do not seem to be any of the imbalances that would tip you into recession, so if we could avoid a real crisis, the economy should be able to pick up and grow at least through the next year.

Mike, one of the wall street notes making the rounds this week was the only hiking that will occur at jackson hole will be on the trails.

Is there something in all of this that we might be missing in that we should look for when miss yellen speaks today at 10:00? well, the real question is -- how far does she go index planning her position?

Does it become a defense of lower for longer, and does the market event see that as a more dovish view that would push out when they might see some tightening?

The advice i am seeing is she will not do that, but nobody has seen the speech, so it this point, that is the real risk to the market this morning.

Mike, what about mario draghi?

He will be speaking this afternoon at 2:30. that is close to the press, but you will be listening for key messages there.

Yeah, that could be more important than janet yellen in a way because the european central bank is being pressed to do more sooner for its economy.

Does he get close to that, does he talk about how he assesses the european economy?

There are nine members of the ecb governing council here, so it could be a very interesting speech from him.

All right, janet yellen at 10:00 a.m., mario draghi at 2:30 p.m. our michael mckee in jackson hole.

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