Warren Buffett says very tough for Fed to lift US interest rates this year given strong dollar

SEATTLE (Bloomberg) - Warren Buffett, investment guru and billionaire chairman of Berkshire Hathaway, said it would be "very tough" for the Federal Reserve to lift interest rates this year because of the stronger U.S. dollar.

"That would exacerbate the problem," Buffett said in an interview on the Fox Business network. "I don't think it'll be very feasible to do."

U.S. economic growth, outperforming most industrialized counterparts, has helped push the nation's currency close to the highest level in more than a decade, making it cheaper for Americans to buy imported goods and helping to lower inflation that's already below the Fed's goals. The U.S. Dollar Index, which the Intercontinental Exchange Inc. uses to track the greenback against currencies of six trade partners, climbed 5 percent last quarter.

The dollar's strength is pushing long-term Treasury yields to record lows as overseas investors look to profit from the rising currency. With Fed policy makers weighing when to raise rates they've kept near zero since December 2008, Buffett said risks still lurk for investors who accept those yields.

"The last asset I would want to buy is a 30-year government bond, but that's a by-product of other policies which make sense," he said. "I don't want a 10-day bond. There's a good chance, who knows what the probability is, but that a 30- year bond, you know, with a 2 1/2 percent coupon, that bond could sell at 60 very easily sometime in the not too distant future. Who knows?"

The U.S. 30-year debt traded at 2.22 percent on Jan. 30, the lowest yield since at least 1977 when the Treasury began regular sales of the securities.

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