The central bank this past week raised interest rates 75 points for the third consecutive week, and it is looking like the 'soft landing' that the Fed has been preaching will not be happening. The Fed was hoping that raising interest rates will slow down economic demand. It is looking like the US economy may be headed for a recession instead, yet it is unclear how bad the recession may be if it does hit. It depends mostly on how quickly price inflation and wages comes down, and if more labor supply enters the economy.
There was a 486-point sell off this past Friday which ended the week at its lowest point since the coronavirus pandemic in 2020. Bond rates have risen to decade high numbers, showing that investors think the economy is going to face hardships in the short term. Inflation is causing widespread hardship and uncertainty for not just Americans, but for other citizens around the world because our economy is so large. The housing market is one side of the economy that is already starting to see a hit from rising interest rates and current inflation. Mortgage rates have already hit double of what they were last year and sales of existing homes continue to plummet. Congress and the Fed have pumped the economy with huge fiscal and monetary stimulus, and after the invasion of Ukraine in February, energy prices and overall inflation began to trend upward.
The US's GDP was revised downward for 2022 and the Fed is predicting that it will continue to operate "below trend growth" until 2025. New inflation data came out just today and numbers have gotten no better and continue to trend down. For now, we have to just sit back and strap in for a bumpy ride.
URL: https://www.investors.com/market-trend/stock-market-today/dow-jones-futures-ahead-of-key-inflation-data-tesla-stock-ai-day/
Hello Alex! Interest rates are increasing month over month to battle inflation with the fed increasing the interest rate .75 points in just the month of September alone! It is also expected that we will see an increase in interest rates about two more times before the end of 2022! You mentioned how mortgage rates have doubles since this time last year and there is a direct correlation between inflation rates, and interest rates when looking at how the housing market is doing. This also goes for any other market that requires financing on purchases.
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