The FOMC will likely raise interest rates by 50 basis points (bps) in December after four consecutive rate hikes of 75 bps a piece over the past five months. It will also likely continue to allow billions in assets to roll off its $8.6 trillion balance sheet per month as it continues its battle to bring down inflation.
The Fed is trying to navigate a “soft landing” for the U.S. economy—that means it’s attempting to reduce the rate of inflation to around 2% without triggering a recession.
The S&P 500 has gained 13.9% since the beginning of October on optimism surrounding recent inflation trends, but there are still several red flags that the Fed’s battle with inflation could be longer and more difficult than investors anticipate.
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