Inflation has been getting worse with each day with no end in sight. Many believe a recession is coming, however, how big the recession will be or how long it will last is still being debated. Either way, the only real power when it comes to putting at least some halt to the economy’s downturn is the US Federal Reserve. The response to inflation began in 2020 with The Fed temporarily accepting inflation as a short-term consequence for the long-term benefit of boosting employment rates. Unfortunately, The Fed’s expectation for inflation to simply be “transitory” and something that would clear up after the pandemic, and supply chain issues cleared up was only wishful thinking; failing to come to fruition as supply chain issues have continued. On top of all of this, issues like the Ukraine crisis have been no help to ongoing supply chain issues and concurrent inflation.
More recently, The Feds have decided to raise rates further in order to tackle inflation. Indeed, according to the Federal Open Market Committee, “a restrictive stance of policy may well become appropriate depending on the evolving economic outlook and the risks to the outlook.” With respect to a specific number, an increase of 50 basis points seems to be a target range.
What do you think about the Fed’s predicted rate hikes and how will you prepare your portfolio?
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.