JPMorgan’s Jacob Frenkel sees opportunity in Fed normalization

Normalization of the U.S. monetary policy isn’t a risk to the marketplaces, it’s an opportunity, JPMorgan Foreign Chairman Jacob Frenkel advised CNBC on Monday.

“Delayed normalization can be very, too costly,” he said within an interview with “Power Lunch.”

The Federal Reserve’s quantitative easing “was an excellent mechanism to extinguish a fire. It’s not an excellent mechanism to stimulate progress in a sustainable method.”

The Fed has recently raised rates of interest twice this year within a plan to slowly normalize monetary policy. It really is largely expected to hike costs by a quarter level at its December meeting.

Plus, in October the central lender started out the process of little by little unwinding its $4.5 trillion balance sheet. The majority of those assets contain the Treasurys and mortgage-backed securities it purchased during its quantitative easing software.

While some could be concerned about industry turbulence as rates climb, Frenkel said equity marketplaces normally represent hope about the near future, as opposed to a picture of the present.

“What is the near future that the equity markets are looking at? They look, for instance, [at] tax reform. They seem [at] deregulation. They seem [at] normalization. They seem [at] infrastructure expense. And if these exact things happen then productivity will also grow,” he said.

– CNBC’s Jeff Cox contributed to this report.

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