April 2021 / VIDEO
Are Rising Rates Good or Bad for Stocks?
Rising rates could present a dilemma for stock investors
Key Insights
- Although rising interest rates are typically a headwind for stocks, the reality is not that obvious.
- Rising rates may make bonds relatively attractive (given higher expected returns), but the anticipated growth likely needed to raise rates could boost stock returns.
- Our review of rising-rate environments over the past 30 years shows that, in a strong recovery, rising rates may not necessarily be detrimental to stocks.
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Sébastien Page is head of Global Multi-Asset and chief investment officer. He is a member of the Asset Allocation Committee, which is responsible for tactical investment decisions across asset allocation portfolios. Sébastien also is a member of the Management Committee of T. Rowe Price Group, Inc.