Patience is a key attribute for any successful long-term investor. In these days of high-frequency trading, co-location services and millisecond trading orders, patience may be measured in minutes instead of months or years. But patience comes with risks.
History will tell us if the Federal Reserve has been too patient with the American economy.
When the central bank's interest rate setting committee meets Wednesday it likely won't make any important changes to its assessment of the economy. New jobs are growing; home sales continue to slowly improve and inflation remains in check. That's been the Fed's evaluation since March even as it has reduced its bond purchases. The billions of dollars in bonds per month the Fed has been buying is on schedule to end in October. If that timing holds, the bank will have spent more than two years and more than $1.5 trillion to successfully keep down long term interest rates.
Meantime, no one expects the agency to change its 0 percent interest rate policy before next summer. The bank has kept its target rate at 0 percent since December 2008. Talk about long term investing.
Critics contend the patience will cost the economy purchasing power as inflation heats up. Hershey's chocolate, Starbucks coffee and Chipotle all have announced price increases in the past month. These high-profile price hikes feed the belief the Fed already has been too patient, allowing inflationary pressures to build. But the bank's composure remains unshaken even as it will be excused of complacency.
Tom Hudson, financial journalist, hosts "The Sunshine Economy" on WLRN-FM in Miami, where he is the vice president of news. He is the former co-anchor and managing editor of "Nightly Business Report" on public television. Follow him o Twitter HudsonsView.