Bill Miller: Fed Won't Raise Rates This Year

The Federal Reserve will not raise interest rates this year but when the monetary authority does tighten, it will create a buying opportunity, says legendary mutual fund manager Bill Miller, chairman of Legg Mason Capital Management.

According to Miller, the Fed is watching resource utilization, such as capacity and unemployment, inflation trends and inflation expectations, all of which are not at levels that call for higher lending rates.

“We think it unlikely the federal funds rate will be increased this year, but if it is it will not affect how we manage the portfolio,” Miller says in a Wall Street Journal blog.

“It is likely, though, that when rates are increased, the market will sell off. That will present a buying opportunity, in our opinion, as corrections due to the Fed moving from accommodative to neutral are quite different from those happening when the Fed is going from neutral to tight.” (more)