CNBC Stock Blog
- So Now You Can’t Give Microsoft Away?
- Groupon Needs More Disclosure: Analyst
- China’s Steelmakers Set for Turnaround: Analyst
- Bulls Bet Silicon Motion Will Bounce
- Tobacco Stocks a Hot Dividend Play: Analyst
- Forget the Earnings, Disney’s Issue Is the Multiple: Analyst
- Drug Stocks Do Well in ‘Gloom and Doom’ Market: Analyst
- 6 Stocks Unworthy of Biotech Bull Market
ABOUT THE CNBC STOCK BLOG
RSS FEED
CNBC EXPLAINS
Risk Is More 'Enticing' Now: Chief Economist
Text Size 
CNBC.com Writer
Earlier this week, the Federal Reserve kept its federal funds rate unchanged in a range of zero to 0.25 percent, and said the economy "continued to pick up" since its last meeting.
Robert Barbera, chief economist at ITG, shared his insights on how the Fed statement impacts financial firms and the economy.
“Six months ago, the question was: The fund rate is already zero, can you invent a strategy that allows you to resuscitate the financials, banks and the like?—And I think the alphabet soup did that,” Barbera told CNBC.
He declared that the buying of Treasurys and mortgages "worked."
“And when I say worked, the name of the game is supposed to be, you reflate the financial system—risky asset prices go up, risky interest rates come down, and then you restart the economic engine,” he said. “And without the ability to take the fund rates down, it wasn’t clear how you were going to do that—but [the Fed] did.”
Barbera said as long as interest rates stay near zero and as long as investors continue to debate whether the economy is self-sustaining, there’s downward pressure on Treasury interest rates—and taking risks becomes more "enticing" for investors.
“And that is the nature of what easy money is about,” he said. “You keep the short rates low, and you try to get lenders back in to risky lending.”
______________________________
More Market Intelligence:
- This Bear-Market Rally Has 'Turned': Elliot Wave Analyst
- Market Tips: All Is Not Well with This Rally
______________________________
CNBC Data Pages:
______________________________
CNBC Slideshows:
______________________________
______________________________
CNBC's Companies in the News:
General Electric* [GE
Loading...
()
]
Wal-Mart [WMT
Loading...
()
]
Target [TGT
Loading...
()
]
Amazon.com [AMZN
Loading...
()
]
* General Electric is the parent company of CNBC.
______________________________
Disclosures:
No immediate information was available for Barbera or his firm.
______________________________
Data is a real-time snapshot *Data is delayed at least 15 minutes
