2022 has been completely different in the viewpoint of monetary policy. Inflation has been rising to the point where the Fed officials now all agree that it won’t be a transitory problem, and rate changes are planned. We’ve undergone one rate change back in the middle of March, and at least 3 more are scheduled for the rest of the year. This has had effects on the stock market, which is down overall in 2022, but things aren’t here to stop, according to some officials.
Lael Brainard, one of the Federal Reserve governors, spoke at a conference on Tuesday, and she caught the ear of many investors. She said that the central bank is heavily committed to cutting inflation by significantly reducing their $9 trillion asset portfolio, which gave the latest news to investors. The markets fell after these comments, and investment officer John Lynch said that Brainard’s comments were definitely the catalyst to the market’s performance, citing her aggressiveness on the balance-sheet roll off. If this is the case, the market performance was justified as the market has expected the Fed to move slowly through this process. This is the first-time interest rates have been raised since 2018. The Fed will speak more tomorrow, and it gives them a moment to address the current Ukraine situation and how their monetary policy will interact with that. Along with this, earnings season is set to kick off next week, letting us see how corporate America is doing with the current economy and geopolitical tension.
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.