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Count United Technologies CEO Gregory Hayes among corporate executives not afraid of the Federal Reserve’s intentions to keep hiking interest rates.
In fact, he told CNBC’s “Squawk on the Street” in a Tuesday morning interview that he has greater fear over what would happen if the Fed would not continue to raise rates.
“My fear is not rate hikes,” he said. “But I am concerned with full employment that there is inflation on the horizon. We’ve got 5,000 job openings today. We’re trying to hire 35,000 people here in the next five years. It’s tough to do.”
Hayes spoke the same day his company announced that it was splitting into three parts, consisting of aerospace, elevators and building divisions.
From a fiscal standpoint, he said interest expense hasn’t been a big expense, comprising about $1 billion last year on $10 billion worth of earnings before interest and taxes. “It’s not that big of a deal for us,” he said.
The Fed is widely expected to hike its benchmark funds rate a quarter point in December, a move that would bring the target range to 2.25 percent to 2.5 percent. Central bank officials have indicated that three more increases are on the way in 2019, but the market at this point is only pricing in one.
Chairman Jerome Powell and other Fed officials have indicated the economy is past the point of full employment. Powell in particular has stressed the importance of acting to make sure growth doesn’t get out of control and force the Fed to move more aggressively.
Hayes said he also worries about the impact of a tight labor market.
“I think there is inflation in the background, and I think labor will lead the way if we can’t find a way to solve that,” he said.