Interest Rates

Fed won't raise interest rates this year: Marc Faber

'Dr. Doom's' bearish swipe at central banks
'Dr. Doom's' bearish swipe at central banks
'Dr. Doom' eyes European real estate & China
'Dr. Doom' eyes European real estate & China
Is the Fed risking a 1937-style slump?
Is the Fed risking a 1937-style slump?

Investors are awaiting a signal from the Federal Reserve on whether the central bank will raise interest rates, but "Dr. Doom" Marc Faber thinks the Fed will keep them waiting.

"In my view, the Fed will not increase interest rates this year," the editor of the Gloom, Boom & Doom Report editor said Wednesday on CNBC's "Squawk Box," pointing to dollar strength and recent disappointing economic data. "The economy simply [is] not taking off, so I don't see there will be an interest rate increase."

Faber made his comments ahead of a scheduled Wednesday afternoon statement from the Federal Open Market Committee and a news conference by Chair Janet Yellen. Some investors expect the central bank will indicate it will begin hiking short-term interest rates from near zero.

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Any move in the federal funds rate would be meaningless until it hits 3 percent, Faber said, referring to the interest charged when one bank lends to another. It's currently near zero percent. The Fed is widely expected to raise rates in increments of a quarter of a percent.

Faber reiterated his opinion that the zero interest rate policies of central banks around the world have "grossly distorted financial markets and misallocated capital."

European stocks will likely outperform U.S. equities this year, Faber said, noting that the spread between yields on European stocks and sovereign bonds is far larger than it is between U.S. securities.

He also likes Chinese stocks better than U.S. equities, in part because he believes China's government has more tools available to ease monetary policy.

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While he believes the economy is weaker than Chinese leaders suggest, he said Chinese stocks can move higher because they have underperformed foreign markets for roughly the last seven years.

The property market in China is also weakening, he said, and he expects capital previously allocated to real estate to flow into equities.