U.S. Federal Reserve chairman Jerome Powell has all but confirmed the first interest rate hike to come in March 2022, as the Fed faces increasing pressure to control inflation which is well above the 2% target rate.
More Details🧐 While Powell didn’t give away the magnitude of the rise in interest rates, analysts expect an increase of 25 basis points (0.25%).
The rate hike would be the first since 2018, a year that saw four interest rate hikes.
The economy (& inflation) are much stronger than the last time the Fed needed to hike rates, according to Powell, suggesting that rate hikes could come in a more aggressive manner if need be.
Why is this Important🤔 Higher interest rates mean higher borrowing costs, which decrease demand (& therefore price) for key drivers of U.S. inflation, such as cars & homes.
As for the stock market, rising interest rates make other investments more attractive relative to equities.
