Why Investors Shouldn't Be Afraid of Inflation

An inflation rate of 2% to 3% is good for stocks because it gives companies the power to raise prices, which helps boost profits.

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(Image credit: whyframestudio)

Barring an unlikely economic meltdown, the Federal Reserve is on track to raise interest rates. I believe that fundamental factors, such as record-low inflation, slow economic growth and aging investors’ rising risk aversion—not the central banks—are the major reasons that interest rates are near zero. The Fed has supported these low rates in an attempt to spur a solid economic recovery.

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Jeremy J. Siegel
Contributing Columnist, Kiplinger's Personal Finance
Siegel is a professor at the University of Pennsylvania's Wharton School and the author of "Stocks For The Long Run" and "The Future For Investors."