Let's talk about the FED Interest Rate Hike and what this means for the markets - Enjoy! Add me on Instagram: GPStephan | GET MY WEEKLY EMAIL MARKET RECAP NEWSLETTER:
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As of a today, the Federal Reserve raised their benchmark interest rates by ANOTHER 75 basis points while they move forward on their path to cool down the highest inflation weāve seen in more than 40 yearsā¦.this was the LARGEST RATE HIKE since 1994, and - itās only just the beginning.
The Federal Reserve is currently scheduled to meet 4 MORE TIMES throughout the rest of the year, in July, September, November, and Decemberā¦meaning, we could potentially see MORE 75 BASIS POINT RATES HIKESā¦.bringing us to a 3.5%-4% federal funds rate by the end of the year.
This would put us at a level not last seen since the beginning of 2008ā¦RIGHT as the United States entered The Great Recession. Of course, there ARE WARNINGS that a recession may simply be UNAVOIDABLE, or that theyāre MORE LIKELY TO RISK ONE for the sake of bringing down inflationā¦but, regardless of what happens, the Federal Reserve DID signal a few forecasts in terms of whatās to come:
Firstā¦.whether or not you believe itā¦they think that inflation has ALREADY BEGUN TO PEAK, and that prices will begin to cool down throughout 2023 and 2024, eventually returning to their baseline of 2%.
Second, they also projected a slowing economy throughout the next 2 years, with the unemployment rate beginning to SLIGHTLY increase.
Third, by bringing down demand - we increase our chances of entering into a Recession. See, their goal, on the surface, is to raise rates ENOUGH to slow down demand to a level that matches supplyā¦and, thatās already beginning to happen. Retail sales have reported down, right as energy costs have soaredā¦so, itās logical to assume that people will begin to cut back.
And fourth, they were quoted as saying: āclearly, todayās 75 basis point rate hike was an incredibly unusual oneā¦and I do not expect moves of this size to be common,ā - which, the market loved. HOWEVERā¦just remember, a month ago, a 75 basis point wasnāt even consideredā¦proof that anything can happen, and should be taken with a grain of salt.
As far as what YOU can do about thisā¦practically, do your best to pay down variable interest rate debt...always get a fixed rate loan if youāre worried about rates rising much furtherā¦and, the boring answer: stay the course as usualā¦because every piece of data tells us that THIS is most likely going to make you the MOST MONEY, long term.
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@t2thek
1 year ago
My biggest issue is how everyoneās bills and cost of living rises drastically but pay and opportunity decreases. Donāt understand how they expect the average person to survive at all.
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