Fed Rate Decision Welcome, but US Economy Shaky: CEOs
Staff Writer, CNBC.com
The Federal Reserve’s announcement on interest rates was welcomed by business leaders in Davos Thursday morning — but there is still nervousness about the future of the U.S. economy.
Everybody has kept interest rates at zero percent when they should probably be at five or six percent. “The world’s on life support right now,” Bill Browder, chief executive of Hermitage, told CNBC. “When they unplug that life support, do you want to own something that has an artificial value?”
The Fed said that it plans to keep interest rates at their current historic lows until late 2014 and reiterated its view that the economy faces "significant downside risks'' on Wednesday.
It also set an official inflation target of 2 percent.
“I don’t think it’s bad, I think the Fed is signaling the fact that they’re putting their priorities into shaping up the economy I think it will be good for business,” Carlos Ghosn, chief executive of Renault-Nissan, told CNBC.
“At the appropriate time, they will reverse course when they think that the U.S. economy is better,” he said. “We understand that and it’s a good course.”
Hermitage's Browder warned that the actions of the central bank were artificially affecting inflation.
“It is no mystery that when you print money it causes inflation, and it’s also no mystery that the inflation statistics we see right now are different to the ones we actually experience as consumers.”