Fed Raises Rates More Hikes RCD #38

The Federal Reserve raised rates again today by a quarter of a point. Many in the media and on Wall Street are claiming this is the end of the hikes. But is it?

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Many are speculating that the rate hikes are due for a pause. And they may pause. Jay Powell however has indicated that there will not likely be any decreases this year intending on holding higher for longer. To gain insight, I’m going to bring up the latest calculations from the Taylor rule which can be found on the Atlanta Fed website. The Taylor Rule uses three calculations to determine what the Fed Funds Rate needs to be in order to curb inflation. In this chart, we can see a standard calculation. The current Fed Funds Rate is now 5.25%. There are three alternative rates for Q2 2023. Those are 6.79, 7.2, and 5.71. This means per this equation, we will still see at a minimum two more rate hikes this year.

The rate hikes are having an effect on the economy, especially after 13 years of artificially low interest rates. What are your thoughts on what is happening? Is inflation hitting your pocket book? Leave your comments below. If you need help buying selling leasing or investing in real estate, please reach out. My team is ready to help.