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Most Trending
+11.30%
+5.40%
+28.01%
+2.63%
+2.79%
Most Trending
+11.30%
+5.40%
+28.01%
+2.63%
+2.79%
After a series of interest rate increases of 0.5% or more, the Fed has now decided to raise the interest rate by 0.25%, bringing it to a range of 4.75% to 5%. The previous increase was also 0.25%.
Initially, the market expected an interest rate hike between 0% and 0.5%. Until recently, a 0.5% hike was predicted due to persistent inflation and a strong labor market. However, the recent banking crisis, coupled with increased bank losses resulting from the interest rate hike, led investors to believe that a more moderate increase is likely.
The Fed predicts that the interest rate will reach 5.1% in 2023 and drop to 4.1% by the end of 2024, indicating a likely decrease during that year. By 2025, it's expected to reach approximately 3.1% before eventually stabilizing at 2.5% in the medium to long term.
It is anticipated that there will be two years of high interest rates, followed by a return to relatively normal levels. During these two years, investing in shares may be challenging due to the attractive interest and yield in the stable market, unless investors are willing to go beyond the two-year period of high interest rates.
As previously mentioned, the interest rate was projected to increase further, but the emergence of the banking crisis has fundamentally altered market conditions. While combating high inflation still requires high interest rates, the crisis poses a threat to financial stability, as the failure of banks has a ripple effect on the entire financial system and the resources needed to salvage it are immense.
Despite the need to combat inflation, the Fed is resolute in its commitment to supporting banks. Today's 0.25% increase signals that the Fed recognizes the fragility of the banking sector and is willing to sacrifice some of the interest rate hike in addition to providing billions of dollars in support.
The Fed's announcement acknowledged the banking crisis and described the banking system as both sturdy and adaptable. However, the recent developments may exacerbate credit conditions for households and businesses, which could impede economic activity, hiring, and inflation. The magnitude of these effects remains uncertain.
Please note that the article should not be considered as investment advice or marketing, and it does not take into account the personal data and requirements of any individual. It is not a substitute for the reader's own judgment, and it should not be considered as advice or recommendation for buying or selling any securities or financial products.
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Disclaimer:
The Score performance whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. The results reflect performance of a strategy not historically offered to investors and does not represent returns that any investor actually attained.
The results reflect performance of a strategy not historically offered to investors and does not represent returns that any investor actually attained. The Readiness Indicators, Sentiment Indicators and total score are calculated by the retroactive application of a model constructed on the basis of historical data and based on assumptions integral to the model which may or may not be testable and are subject to losses. Active trading is generally not appropriate for someone of limited resources, limited invesment or trading experience, or low-risk tolerance. Your capital may be at risk.
Please note that no offer or solicitation to buy or sell securities, securities derivatives of future products of any kind, or any type of trading or invesment advise, recommendation or strategy, is made, given or endorsed by StocksRunner including any of their affiliates ("TS").
This information is provided for illustrative purposes only. You should not rely on any advice and/or information contained in this website and before making any investment decision. we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.
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Disclaimer:
The Score performance whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. The results reflect performance of a strategy not historically offered to investors and does not represent returns that any investor actually attained.
The results reflect performance of a strategy not historically offered to investors and does not represent returns that any investor actually attained. The Readiness Indicators, Sentiment Indicators and total score are calculated by the retroactive application of a model constructed on the basis of historical data and based on assumptions integral to the model which may or may not be testable and are subject to losses. Active trading is generally not appropriate for someone of limited resources, limited invesment or trading experience, or low-risk tolerance. Your capital may be at risk.
Please note that no offer or solicitation to buy or sell securities, securities derivatives of future products of any kind, or any type of trading or invesment advise, recommendation or strategy, is made, given or endorsed by StocksRunner including any of their affiliates ("TS").
This information is provided for illustrative purposes only. You should not rely on any advice and/or information contained in this website and before making any investment decision. we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.
