Strategist Weighs In On The Fed's Rate Hike

• U.S. equities surged on Wednesday following the Fed's rate hike decision.
• Speaking to Benzinga, JJ Kinahan pointed out that a rate hike usually takes 12 to 18 months to "go through the system."
• Kinahan added that the rate hike serves as a "warning signal" for retail traders and not a "the sky is falling" scenario.

U.S. equities surged on Wednesday after the Federal Reserve raised its key interest rate from a range of zero percent to 0.25 percent to a new range of 0.25 percent to 0.5 percent. Wednesday's rate hike marks the first time the central bank has taken this sort of action since 2006.

Speaking to Benzinga, JJ Kinahan said that other than a rate hike, it is "really hard to do much else" to spur additional economic activity. The strategist pointed out that it is often forgotten that a Fed rate hike needs 12 to 18 months to "go through the system."

Related Link: Your Federal Reserve Rate Hike Handbook: Dig In

Additional Rate Hikes May Be Warranted

Kinahan continued that further rate hikes may be warranted when it is evident the economy is able to "take inflationary numbers" while still increasing demand for housing and job creations.

Kinahan also cautioned retail traders that the Fed rate hike is a "warning signal," but not a "sign that the sky is falling," as adjusted rate mortgages and credit card debt will "adjust accordingly."

In fact, Kinahan also suggested that Wednesday's equity surge wasn't necessarily due to the Fed's decision. He noted that the fixed income already had a rate hike "built in." Nevertheless, the Fed had a "very limited" influence, as their top priority is policy and not supporting stock market valuations.