5 Things to Expect from the Fed Signaled Inflation Increases

After many years of historically low-interest rates following the 2008 financial crisis, it seems that surging inflation will force the Federal Reserve to increase its rates.

5 Things to Expect from the Fed Signaled Inflation Increases

US Dollar Strengthening

A currency’s value relative to others also links to interest rates. When the Fed increases interest rates to control inflation, it may increase the demand for foreign investment since returns become higher.

Oil and Other Energy Prices Rising

Oil is notorious for being one of the most volatile markets there is, and it’s hit the headlines even more recently for being volatile due to the Russia-Ukraine conflict.

US Bond Rates Increasing

Bonds can be a good predictor of prices and inflation. The interest rates that bonds offer to investors partly depend on how much inflation a country is experiencing.

House Prices Declining

When interest rates are higher, it’s less appealing for prospective homebuyers to take out a mortgage because their monthly payments will be higher. Less demand for houses should theoretically mean that house prices fall (assuming that supply remains around the same).

Stock Prices Decreasing

Higher interest rates could be one reason (among many more) why the stock market has declined since the start of 2022, and it may mean the trend is likely to continue – at a minimum we can expect some big swings in prices and volatility.

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