Wells Fargo CEO: Interest Rates Need to Normalize
Wells Fargo Chairman and CEO John Stumpf told CNBC on Thursday that interest rates need to return to the historically normal levels that existed before the Federal Reserve started its accommodative monetary policy to help the economy after the financial crisis.
"Savers have paid a huge price in this recovery. We need to get back to normal. It's been four or five years. It's a good thing," he said in a "Squawk Box" interview a day after Fed Chairman Ben Bernanke suggested the central bank could start to taper its $85 billion-a-month bond-buying program later this year, provided the economy continues to improve.
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"We went through a tough deal [in] the five last years. It affected the psyche of consumers," Stumpf added. "[But] the real economy is stronger than the numbers show."
Housing continues to "get better," he continued. "Housing is really important. Housing has led every recovery or participated in a big way. [Agriculture] is doing relatively well. Energy, who would have ever guessed that we would be potentially self-dependent or self-sufficient [on] energy."
In the policy statement released after the conclusion of the Fed's two-day meeting Wednesday, policymakers repeated that they would not raise near-zero interest rates until unemployment drops to 6.5 percent or lower, provided that the outlook for inflation stays under 2.5 percent.
Bernanke made clear that those thresholds were merely for considering a rate hike, not necessarily a trigger for tightening.
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"If rates rise because of an improving economy, even though some business might be disadvantaged in the short run, we really are the success of our customers," Stumpf said. "Good news is good news."
But the bond market isn't waiting. Yields soared Wednesday and into Thursday, while stocks closed sharply lower with the futures pointing to a lower open on Wall Street.
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"I'm not a big fan of this much accommodation this late in the game," Stumpf added, "because I think the benefits from it [are] not there. It also helps mask things that should be happening on the fiscal side."
More of the focus will be on Washington, he said, adding that Capitol Hill and the White House need to agree on a deficit-reduction deal and an overhaul of the tax system. "Tax policy in the U.S. at minimum should be neutral to job growth here. At best, it should be positive to job growth here. It is not today."