Morgan Stanley

Morgan Stanley Wealth Management Investor Pulse Poll: Most Retail Investors Expect Interest Rate Hike by Mid-2016; Few Say They Are Adjusting Investment Portfolios in Advance

Sep 9, 2015

No Consensus on Whether Rate Hike Good or Bad for Economy

New York —

A majority of retail investors – 62% – expect the Federal Reserve to raise interest rates by mid-2016, with millionaires even more convinced a rate hike is coming (75%).

Yet most investors (55%), including millionaires, say they are not adjusting their investment portfolios in advance of a possible increase, by, for example, selling real estate investments or changing fixed income allocations. Among actions they say they have taken: 19% paid off consumer debt, 11% bought a car or other big ticket item, and 10% refinanced a mortgage.

There is no consensus on whether a rate hike will be good or bad for the economy: 31% of surveyed investors say good, 24% bad, 23% say neither good nor bad, and 22% are unsure.

These are among the findings of the latest Morgan Stanley Wealth Management Investor Pulse Poll, which this summer surveyed 1,000 U.S. households with at least $100,000 in investible assets, a third of which had investible assets of $1 million or more.

Those predicting a rate increase are divided on its magnitude. Most expect an increase of 0.5% (38%) or 0.25% (24%), while one in seven (14%) are unsure.

A majority of investors, 57%, express at least some concern that prolonged low interest rates have created a consumer assets bubble, but only 12% view this as a major concern.

Investors continue to have a positive economic outlook: 76% of those surveyed believe the global economy will be the same or better over the next 12 months and 78% believe that of the U.S. economy.

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