Editor's Blog: Interest rate hike expected

by Lawrence Aylward
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KANSAS CITY, Mo. – Christmas is coming. And reportedly, so is an interest rate hike by the Federal Reserve, which could change the investment climate greatly. 

Lawrence Aylward
Lawrence Aylward

The Federal Reserve is expected to increase short-term interest rates when it meets in December. The suspected hike comes on the heels of Friday’s report that US companies added 271,000 jobs in October. According to Bloomberg News, there is a 70 percent chance the Fed takes up rates in December. The Federal Reserve has kept its target range for the federal funds rate at 0 to 0.25 percent since December 2008, often referred to as the Fed’s “zero interest rate policy.”

A rate hike will negatively affect many stocks, especially those with high dividends. But according to a story in USA Today on Nov. 9, food stocks may be one of the best areas for investors during periods of rising rates, according to Robert Johnson, president of the American College of Financial Services and co-author of “Invest with the Fed.”

In short, a rate hike could be good news for meat and poultry stocks, which, by the way, were also unaffected by the World Health Organization’s report last month that processed meat is “carcinogenic” and that red meat is “probably carcinogenic.”

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