NEW YORK -- The Federal Reserve's Open Market Committee followed through on expectations last week and raised short-term interest rates a quarter point to 1.25%, its first rate hike in four years.
gler, principal, PUPS Investment Management, Santa Barbara, Calif. "It won't affect consumer spending. The consumer is just primed to spend."
He said pent-up demand for new products from consumers who had been fearful about the weakened job market in recent years will send consumers into retail stores. He also said the increased cost of borrowing money would not be likely to affect food retailers' willingness or ability to borrow.
Britt Beemer, chairman and founder of America's Research Group, said it would take a much bigger jump by the Fed to turn consumers' heads. "Consumers would be more affected if companies laid off or stopped hiring employees, or if gas prices continue to increase," he said.
The FOMC, which sets interest rates, had indicated since January the likelihood of gradually raising rates to head off the specter of higher prices creeping into a rebounding economy. Fed Chairman Alan Greenspan also has made similar statements to Congress. Before Wednesday's action, interest rates stood at 1 percent, a 46-year low.