Will Rates Reach 4%?

Will Rates Reach 4%?

(9/20/22) The latest two-day meeting of the Federal Open Market Committee begins today; markets rallied off the May support line in anticipation of Fed Chair Powell's remarks tomorrow.

It's expected the Fed will hike rates 75-basis points as it continues to fight inflation by slowing the economy, a phenomenon with which the Fed is apparently comfortable.

That means earnings will have to come down even more so than already forecast, putting more pressure on stock prices later this year.

The Fed's goal is to get inflation down from the current 8% range to 2% territory.

Expectations are the Fed will continue to raise interest rates up to the +4% level before holding firm, and there's no guarantee the Fed will immediately begin to lower rates.

The only reason the Fed would lower rates would be in response to an orderly market becoming disorderly.