Warren Buffett has compared rates to gravity: ‘they power everything in the economic universe’. Here our favorite Buffett’s quotes about interest rates:
“Interest rates are to asset prices like gravity is to the apple. They power everything in the economic universe.” [2013]
“There’s nobody whose predictions on interest rates I would pay attention to, even myself, even Charlie.” [2018]
“It’s the same thing as predicting what business is going to do, what the stock market is going to do. I can’t do any of those things. But that doesn’t mean I can’t do well investing over time.” [2020]
“The value of every business, the value of a farm, the value of an apartment, the value of any economic asset is 100% sensitive to interest rates. The higher interest rates are, the less that present value is going to be. Every business, whether it’s Coca-Cola or Gillette or Wells Fargo — its intrinsic valuation is 100% sensitive to interest rates.” [1994]
“The most important item over time in valuation is obviously interest rates. Low interest rates make any stream of earnings from investments worth more money. Any investment is worth all the cash you’re going to get out between now and Judgment Day, discounted back. Well, the discounting back is affected by which interest rates you use.” [2017]
“If I could only pick one statistic to ask you about the future before I gave the answer, I would not ask you about GDP growth. I would not ask you about who was going to be president, or a million other things. I would ask you what the interest rate is going to be over the next 20 years on average.” [2017]
“I would say that’s the most important question in the world. And I don’t know the answer.” — (On responding to a question about the impact of negative US interest rates on financial markets) [2020]