![]() They also boosted their US economic growth forecast as a result of the Fed’s upbeat mood Wednesday at the conclusion of its two-day policy meeting.Īll of that is good news for your wallet and your portfolio. Goldman Sachs analysts in a note to clients Wednesday said they expect the rate cutting to begin in March and continue throughout the spring. But lowering rates next year would also signal that the Fed believes it has won its hard-nosed battle against inflation, one it was so determined to win that it hiked rates at the fastest pace in modern history. The Fed holds interest rates steady for third consecutive timeĪlthough Fed Chair Jerome Powell in a press conference Wednesday cautioned we are far from clear of a hard-landing scenario, a turn to lower rates could help soften the blow higher rates have taken on the US economy - an economy that has many Americans feeling disgruntled. Eccles Federal Reserve building in Washington, D.C., US, on Wednesday, July 6, 2022. But central banks historically have been quite bad at landing that plane safely - so bad, in fact, that the “hard landing” metaphor has become a jargon term used for when restrictive lending standards crash the economy into a recession. ![]() By raising lending rates, central banks like the Fed, the Bank of England and the European Central Bank have (purposefully) been trying to slow down their respective economies to get out ahead of inflation. It also would remove some of the economic risks associated with hiking rates. That’s why the Dow shot up to a record high Wednesday and the broader S&P 500 was approaching a record set at the beginning of 2022. And business lending could become cheaper, freeing up corporate profit that makes stocks more attractive. Mortgage rates, which have been hovering around a two-decade high of near 8%, could mercifully come down. ![]() Lower rates could make borrowing cheaper. A reverse-course for rates has all kinds of implications for consumers, businesses and investors - many of them welcome. ![]() But in its economic projections Wednesday, the US Federal Reserve predicted rates would be significantly lower by this time next year than they are right now, implying three rate cuts next year. ![]()
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