ສິ່ງທີ່ Fed ຍົກອັດຕາດອກເບ້ຍຫມາຍຄວາມວ່າສໍາລັບຕະຫຼາດ

Key Takeaways

• Inflation hits highest levels in 40 years
• The Fed lifts interest rates
• Markets perform well despite news of rate hikes

On Wednesday, the Federal Reserve announced that it will begin lifting interest rates. Policymakers made the move to boost borrowing costs in a concerted effort to combat inflation.

While announcements like these typically take a toll on markets—largely because they can impact consumer spending—this time, the markets are actually performing quite well.

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The first interest rate hike since 2018 came after the two-day meeting this week. The boost of a quarter point was the first of many anticipated hikes to come—with as many as half a dozen more in 2022, plus another three or four in 2023.

ອັດຕາເງິນເຟີ້ແມ່ນ ສູງ ດຽວ​ນີ້. Consumer prices are ticking up at their fastest rate in about 40 years. In fact, prices climbed 7.9 percent in February compared to the previous year, according to a ບົດລາຍງານດັດຊະນີລາຄາຜູ້ບໍລິໂພກ (CPI).. It also marks the highest annualized growth rate in inflation since January 1982.

The re-opening of the economy amid the ongoing COVID-19 crisis has driven pent-up consumer demand, wreaking havoc on the supply chain. Recently reimplemented lockdowns in China are only further threatening supplies. And, coupled with Russia’s invasion of Ukraine (and the toll it’s taking on surging oil prices, never mind global markets at large), inflation has been creeping up beyond anything Americans have experienced in quite some time.

However, some suggest that inflation is not transitory at all. Rather, it may be driven, in part, by a major increase in the money supply. In other words: More dollars chasing similar amounts of goods means higher prices.

Whatever the root cause, the Fed is in charge of taming inflation and maximizing employment. And, yet, Fed Chair Jerome Powell told the Senate Banking Committee in January that high inflation is a “severe threat” to employment numbers.

“To get the kind of very strong labor market we want with high participation, it’s [going to] take a long expansion,” he said. “We can see that participation is moving only very slowly. And to get a long expansion, we’re [going to] need price stability and, so, in a way, high inflation is a severe threat to the achievement of maximum employment and to achieving a long expansion that can give us that.”

Investors are now feeling like the Fed is finally taking charge to combat inflation and boost employment.

Normally, news of the Fed raising interest rates would cause a sell-off. Theoretically, spiked interest rates would make stocks less appealing as higher borrowing costs generally equate to lower spending. For example, an Evercore ISI ການວິເຄາະ found that, during the last four rate-hike cycles, the S&P 500 dropped by four percent in the first month. Even if, a year later, it was an average of five percent higher.

But, this time, the major indexes rallied almost immediately after the news. More specifically, the S&P 500 briefly ticked into the red but recovered to end the day on a high note. The Dow Jones, in a similar fashion, ended 1.6 percent higher. And the Nasdaq surged to close 3.7 percent higher at the end of the day, also following a quick dip.

Kathy Jones, chief fixed-income strategist for the Schwab Center for Financial Research, told ໄດ້ Wall Street Journal that she believes investors are optimistic about the Fed’s move. The rate hike “seems very much like [the Fed] wanted to send a message that they’re fighting inflation, and they’re going to fight it fast and get it under control,” she said. That optimism could be the culprit behind the positive performance of the markets.

After all, “monetary tightening means the Fed believes the economy is on solid footing, which is a good thing at the end of the day,” Mike Loewengart, E*Trade managing director of investment strategy, told CNBC.

Therefore, investors may be feeling hopeful for the future. Still, some critics argue that, due to so much economic uncertainty, the Fed may not be in a position to raise rates as much as it has in mind.

For investors looking to make the most of the markets right now, keeping an even keel—and not allowing excitement or fear to drive investment decisions—is wise.

Q.ai’s Investment Kits are a solid place to start. A combination of AI-driven diversification and a focus on reducing volatility risk means more potential for your portfolio.

While some specific industries continue to feel the effects of the pandemic, others take a hit amid the Russia-Ukraine conflict, and the supply chain sorts itself out, diversification can help protect investors’ funds. And, with Q.ai, investors can set recurring deposits into diversified Kits to automatically invest without trying to time the markets or make impulsive, emotion-driven decisions.

Plus, for investors who want to protect further, Q.ai’s Inflation Protection Kit invests in a basket of securities designed to retain value and potentially grow in an inflationary environment. This Limited Edition Kit will remain available for users for as long as our internal experts continue to expect high inflation.

With Q.ai, you can let our AI drive asset allocation for you, and sit back and relax while the world awaits outcomes from the Fed.

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