Lu said she’s hoping that the rate of inflation will finally start to moderate later this year. “If you asked me about the Fed a week ago, I would have been pretty sure the Fed would raise by half a point in March, but the likelihood of a quarter point hike is now much higher,” said Judith Lu, CEO and founder of Blue Zone Wealth Advisors, citing the worries about Russia and Ukraine. It’s almost impossible to know what will happen in the next few weeks and months. The only thing that seems certain is that market and economic uncertainty is not going away. Strategist: Fed needs to protect economy, not the stock market (The Fed raised rates again in December that year.) The Democrats won control of the House from the Republicans in that election. To the dismay of then-President Donald Trump, the Powell-led Fed raised rates three times in 2018 before the midterms, including one hike in late September. That’s exactly what the agency did four years ago during the last midterm cycle. “The best thing the Fed can do is ignore the fact that it’s a midterm election year and focus on data.” “The Fed can be political by not raising rates,” said Victoria Fernandez, chief market strategist with Crossmark Global Investments. That means the Fed needs to continue monitoring economic reports, and right now, inflation pressures still suggest that there will be more rate hikes in the near future. Its so-called dual mandate is to maintain price stability and maximum employment, not ensure the status quo on Capitol Hill. The central bank is staunchly apolitical and doesn’t care about the calendar. Others argue that the last thing the Fed will want to do is base its decisions on political calculus. The Fed will look at economic data, not the midterm polls “The Fed could front-end load some rate hikes so to avoid the midterms and stay apolitical,” said Jeff Mortimer, director of investment strategy at BNY Mellon Wealth Management. The Fed typically tries to steer clear of raising rates too close to an election, in this case the November midterms, to avoid any perception that its policies might benefit or hurt a particular party. Here’s why the timing matters: Rate increases could - and likely will - have a negative impact on the markets and the economy. The only question is whether the Fed will boost rates by a quarter of a percentage point or a half-point.īut there are some Wall Street experts who think Fed chair Jerome Powell and his fellow central bankers will look to do as much as they can to curb inflation now in order to avoid more rate hikes in the late summer and fall.
0 Comments
Leave a Reply. |