The Feds meeting this month is one most investors have been anticipating, especially given the multivariable circumstances they need to juggle. From Ukraine to inflation to a host of other economic issues, the Fed will have a lot on their plate this week. The public expectation is that the Fed will start raising interest rates following the conclusion Wednesday of its two-day meeting. Experts such David Kelly, Chief Global Strategist for JPMorgan Funds have said “The economic outlook supports the Fed’s current plans to boost the federal funds rate in March and to begin to reduce their balance sheet over the summer, However, there are a number of areas of uncertainty which should make them a little more cautious in tightening.”
The specific amount the Feds will run their rate hike is hard to say, but many expect the rate-hike to be around a quarter-percentage point, or 25 basis points. From a financial market’s perspective, the integral question is whether the hike is “dovish” or “hawkish.” Dovish implies that the Feds moves are indicative of a cautious path ahead while “hawkish” means they are determined to keep raising rates to fight inflation at the cost of economic growth. Every Fed decision has a direct impact on the economy both positively and negatively, it will just come down to what is more important. In other words, economists will be weighing opportunity costs. What do you think about the fed meeting this week? And are you preparing your portfolio in any specific way?
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.