(Bloomberg) — The Federal Reserve’s interest-rate increase was long overdue and won’t provide much support to the U.S. economy by itself, according to billionaire investor Wilbur Ross.
The Fed “fiddled far too long with it,” Ross, chairman of WL Ross & Co., said in a Bloomberg Television interview on Thursday. “If this is the only underpinning of the economy, we don’t have much going for us.”
However, raising rates is the right thing to do and will likely lead to a stronger U.S. dollar, particularly considering that the European Central Bank and Bank of Japan are easing monetary policy, he said.
“The key is the glide path,” he said. The Fed’s target rate of 1.375 percent by the end of 2016 is the “right direction.”
The Federal Reserve on Wednesday raised interest rates for the first time in almost a decade, in a widely telegraphed move that Chair Janet Yellen said would be followed by “gradual” tightening as officials watch for evidence of higher inflation.
A stronger dollar, in turn, will complicate efforts by other countries to lower their rates, since American institutions will shift their borrowing to those markets.
“There’ll be arbitrage,” Ross said.