Warren Buffett Thinks The Fed Shouldn't Raise Rates In 2015

Warren Buffett said that he expects the Federal Reserve to hold rates near zero due to the current strength of the dollar and weakness of European and Asian nations' economies.

The Federal Reserve has kept interest rates near zero in an effort to strengthen the U.S. economy following the Great Recession. The main reason low rates help the economy is that they make it cheaper to spend, even during a time of slow economic growth.

Federal Reserve Considering Mid-2015 Rates Increase

But as the U.S. economy has continued to strengthen in recent months, Federal Reserve Chair Janet Yellen and other officials have indicated that a rate hike might be coming in 2015. With a strong jobs report for the third month in a row, which found that employers added 257,000 jobs in January, the Federal Reserve might raise rates in June, reports The Wall Street Journal.

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Philadelphia Fed President Charles Plosser said he's "on the cusp" of raising rates on CNBC's "Squawk Box." "I think we are rapidly approaching a point where it's hard to justify not raising [rates]," Plosser said, citing low unemployment rates, low inflation, and strong economic growth.

"The dollar has strengthened somewhat over the last year or so, but it's still not as strong as it was five, 10, 15 years ago," Plosser said.

Warren Buffett And Jack Welch Say Rate Increase Would Hurt US Exports

From Warren Buffett's view, however, the recent slump in world economies should indicate to the Federal Reserve that it's not yet time to raise rates. "It'd be very tough for (the Fed) to raise rates," Buffett said Wednesday on Fox Business. "I think you'd have a lot of international repercussions."

How would higher U.S. rates affect other nations' economies? The dollar has strengthened in recent months, despite a continued struggle to see improvement in European and Asian economies. If the Federal Reserve were to hike rates, the U.S. would further outpace key world currencies like the euro and yen, reports The Associated Press.

A stronger dollar might be good for consumers, with a promise of cheaper foreign goods; but too much of a difference between the U.S. dollar and other currencies could actually lower the profits of American companies with large overseas markets.

With international buying power lowered in relation to the U.S., these companies doing business overseas would have their pricing and profits limited by local economies.

"I think it's going to be very tough to raise rates when you've got what's going on around the world," Buffett said.

Buffett's not the only American business mogul to think so. Jack Welch, former CEO of General Electric, also thinks that a rates hike would dampen exports.

"It would be insane" to raise rates in the near future, Welch said on Wednesday on CNBC's "Squawk Box. "Your exports would fall off the table even more. The dollar would strengthen. It does nothing at all for the U.S. economy."