The Decision Is In – The Federal Reserve’s Rate Pause ⏸

The Decision Is In – The Federal Reserve’s Rate Pause

After nearly two months of rates left unchanged, the time has come when the Federal Reserve settles for the next step in monetary policy. With a rate hike during the last meeting in July, members of the Federal Reserve chose to pause rates, leaving the current federal funds rate at 5.25% to 5.5%, the highest level in 22 years. This decision has become just the second pause since March 2022, where 11 hikes have given borrowers a very strenuous economic environment. Along with the pause, the Federal Reserve also increased its economic growth expectations, jotting an expected 2.1% rise in gross domestic product this year. In correlation to higher interest rates, the Federal Reserve also continued to shrink its balance sheets, cutting nearly $815 billion since June 2022.

Although the move to pause was expected, investors weren’t so enthralled with the post-comments made by a hawkish Jerome Powell. As the Federal Reserve Chairman, Powell insinuated that one more rate hike may be left for 2023, with the next two meetings occurring in November and December. After concluding that more progress was needed to be had, Powell also shared that fewer rate cuts may occur next year than previously forecasted. To reach the goal of 2% inflation, members of the FOMC had estimated by 2026, the funds rate should reach around 2.9%, remaining higher than it was just two years ago. Powell finished his remarks with an answer to the idea of the fabled “soft landing”. Claiming it was the “baseline expectation”, he reiterated that it was plausible, but external factors certainly do not rule other outcomes out of the question.

Want to learn how to invest? Download the Invstr app, where you can play Fantasy Finance and manage a virtual investment portfolio or open a brokerage account and invest for real. Take our interactive investing course on Invstr Academy and become a better investor today!

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.

Share:
More Posts
Load More
Get your daily Invstr Crunch

Get the market news and updates you need, delivered to your inbox or available on our daily podcast.

Facebook Twitter Youtube Instagram Snapchat Tiktok
learn
products
plan
Who we are
blog

Risk Disclosure:

Invstr is not a bank and banking services are provided by Vast Bank, N.A.

Brokerage and Banking services are currently only available to U.S. residents.

Invstr app and web services are provided by Invstr Ltd. Advisory services are provided by Invstr Financial LLC, an investment adviser registered with the Securities Exchange Commission (SEC) details of which can be obtained here. Securities brokerage and custody services are provided by Apex Clearing, a broker dealer registered with the SEC and a member of FINRA and SIPC. There is no bank guarantee on securities and securities may lose value.

Investing involves risk and can lead to losses. Past performance does not guarantee future results.

Invstr app and web services are provided by Invstr Ltd. Invstr+ advisory services are provided by Invstr Financial LLC, an investment adviser registered with the Securities Exchange Commission (SEC). Securities brokerage and custody services are provided by Apex Clearing, a broker dealer registered with the SEC and a member of FINRA and SIPC. There is no bank guarantee on securities and securities may lose value. Vast Bank N.A. a nationally chartered bank and member of the FDIC, provides the banking products, including the products and services related to digital asset accounts. As with any asset, the value of Digital assets can go up or down and there can be a substantial risk that you lose money buying or holding digital assets. You should carefully consider whether trading or holding Digital assets is suitable for you in light of your financial condition. Your digital account does not support wallet to wallet transferring of your digital assets (i.e. cryptocurrencies) outside the platform. Any Digital Assets in your digital asset account are not insured by any government entities, including but not limited to FDIC or SIPC. The Invstr Visa® Debit Card is issued by Vast Bank, N.A. pursuant to a license from Visa U.S.A Inc and may be used everywhere Visa debit cards are accepted. Invstr Ltd, Invstr Financial LLC and Invstr Securities Ltd are subsidiaries of Marketspringpad Holdings (collectively “Invstr”) and Invstr is solely responsible for the application services and website content.

Watchlists provided when users first access the service are not a recommendation to invest. Instead they are provided to help users better navigate the service. Users are free to edit and create their own watchlists. From time to time, Invstr will suggest instruments solely based on an individual’s interest and the interest levels of the Invstr community. The statistical and portfolio builder models generated by Invstr do not reflect actual investment results and are not guarantees of future results. Comments provided by Invstr leaders, influencers or members of the Invstr Community are not recommendations and should not be construed as such. Invstr does not endorse the content or the positions posted by them. Their investment approach, and that of the models provided by Invstr, may be different from yours and may not be appropriate for you.