Powell Suggests 3 Rate Hikes on Track for 2018

Feb 13, 2018

Powell Suggests 3 Rate Hikes on Track for 2018

Equity investors often look for every possible reprieve during a stock market slide. At this point in time, however, it seems as though the Fed will not be providing one. According to a BloombergMarkets article titled “Powell Suggests Fed to Go Ahead with Rate Hikes Despite Market Turmoil”, the Fed will continue with previously scheduled rate hikes. Investors hoping that the Fed would have a change of course following recent market volatility were left disappointed when new Fed Chairman Jerome Powell suggested that no change of strategy would be coming. With yields climbing and markets in a precarious position, this does not come as welcome news to investors.

Operating under the belief that the economy is heating up with inflation continuing to rise, the Fed posits that the recent equity dip is a non-factor, or as Federal Reserve Bank of New York President William Dudley described, “small potatoes”.

If investors can take any heart from what was said, no further rate hikes were mentioned beyond the three scheduled for this year. Operating under the belief that any rate increases have already been priced into equity value, any further scheduled increases could spell trouble for investors.

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