Buffett Talks Raising Interest Rates, IBM, Clayton Homes At Annual Meeting, CNBC

OMAHA, NE (AP) — Investor Warren Buffett said he thinks the Federal Reserve will have a hard time raising interest rates significantly while Europe continues to struggle.

         Buffett discussed the outlook for rates during an interview on CNBC Monday after answering questions in front of more than 40,000 people at Berkshire Hathaway's annual meeting Saturday.

         Buffett said he expected interest rates and inflation to be much higher by now as a result of the steps taken to revive the economy after the Great Recession.

         Buffett said he was wrong about rates so far, but he doesn't think U.S. rates will increase much while Europe's interest rates remain so low.

         Raising U.S. rates now, Buffett said, would make the dollar even stronger and hurt U.S. exports.

         During the interview Buffett also said he remains confident in IBM's future, and his Berkshire Hathaway added to its stake in the technology firm earlier this year.

         Buffett said he believes IBM will be making more money ten years from now than it does today, and IBM is repurchasing its stock aggressively so Berkshire's share of the company's profits will grow over time.

         Berkshire owns about 9 percent of IBM's stock now.

         Buffett said he thinks IBM will fare well in cloud computing and corporate services because of the level of security it offers with its products.

         IBM displayed the capabilities of its Watson program at Berkshire's meeting on Saturday.

         Also on CNBC, Buffett said Berkshire Hathaway's manufactured home unit lends responsibly and he isn't concerned about Clayton Homes' practices.

         Clayton's lending was questioned last month in a story by The Seattle Times and The Center for Public Integrity. The story said Clayton appeared to be using predatory lending practices, and some buyers were pressured into loans that they couldn't afford.

         Buffett said Clayton generally holds on to the loans it makes, so when buyers default it loses money.

         Buffett said he hasn't received any complaints about Clayton in the past three years when 300,000 home loans were made, but he couldn't discuss specific cases the article mentioned.

 

 

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