The Fed’s Latest Rate Hike
The Federal Reserve has announced its latest monetary decision, with the central banks hiking rates by the expected 75 basis points.
“Chairman Powell made it clear that his bias is to err on the side of over-tightening rather than under-tightening in order to avoid the risk of inflation becoming entrenched,” said Yung-Yu Ma, Chief Investment Strategist at BMO Wealth Management. The Central Bank states it would consider tightening monetary policy cumulatively, which suggests it is leaving the door open to slow the pace of hike, though not end them.
What will be next for the stock market after this last jumbo rate hike? Well, the economic data calendar includes key readings on inflation and the labor market. Also, the U.S Midterm elections could result in Democrats losing control of one or both chambers of Congress.
Stocks initially rallied after the Fed’s rate hike announcement, which gestured towards slower rate increases in the offering. But at the end of the day the indexes were all down after Jerome Powell stated it was too early to “pause” rate hikes.
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.