Markets are too sanguine on Fed hikes, US$70bil fund says

Boston Fed President Eric Rosengren on Friday made a case for keeping the central bank's actions independent from politicians.

SYDNEY: Financial markets are underestimating the extent to which the US Federal Reserve will keep lifting interest rates, according to Newton Investment Management.

“In the medium-term view, the markets are a little bit sanguine about the potential risks associated with interest-rate increases – because borrowing costs have been very, very, very low for corporates for a long time,” said Curt Custard, chief investment officer at Newton, a London-based subsidiary of Bank of New York Mellon Corp. “You’re probably going to see more rate hikes than currently discounted.”