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Fed rate hike won’t end housing recovery: Fidelity

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A rise in short-term interest rates by the Federal Reserve in two weeks wouldn’t snuff out the housing recovery, Fidelity Investments fixed-income portfolio manager Bill Irving said Thursday.

“[Nobody] expects 10-year and longer rates to move as much as the fed funds rate might move,” said Irving, whose funds manage $35.6 billion in assets.

“I don’t think that the start of this hike cycle means that for instance that mortgage rates are going to rise a lot,” Irving said. “I think the housing market will take this quite in stride.” He sees the real estate market supported by a continued gradual loosening of lending standards and gains in employment and income.

Irving thinks Fed Chair Janet Yellen and her colleagues will indeed raise the fed funds overnight lending rate by 25 basis points at the Dec. 15-16 meeting. “The open question is can she convince the market that this is not the start of steady rate [rise] cycle,” he said.

Read MoreYellen: Data could still sway December rate decision

“I would say the Fed already started tightening monetary policy 2½ years ago, with the taper [of QE], which tightened financial conditions, raised the value of the dollar, [and] hurt the manufacturing sector,” Irving said on CNBC’s “Squawk Box.”

The seventh anniversary of the Fed’s first round of quantitative easing was last month. Through several iterations of the massive bond buying program, the central bank’s balance sheet has swelled to $4.5 trillion. The final round of QE ended in October 2014.

The Fed last hike rates more than nine years ago. The current near-zero percent rates have been in place since December 2008 in an effort to boost the economy during the Great Recession.

Read MoreECB to extend QE until at least March 2017

Many Fed critics have been arguing for some time that ultra-low rates are no longer need because the crisis is over.

But one fact is almost universally accepted, Irving said: “Very accommodative monetary policy has certainly been supportive of risk assets, including equities and probably home prices as well.”

“That’s part of the Fed’s playbook,” he said.