POWER LENDING
The Effect of Fed Interest Rate Hikes
It is also expected that this year, we might be seeing as many as five or six more quarter-point hikes and a possible three or four more in 2023. These moves are meant to combat high inflation. BUT HOW EASY WILL THIS BE? NOT EASY AT ALL! Economists now say that raising the interest rates poses unique risks to the economic growth that the Fed may not be able to raise the interest rates as much as it would 14 | APRIL 2022
like to. The current conflict between Ukraine and Russia has made inflation in the country much worse creating more risks for economic growth. Furthermore, while Covid-19 may have been combated and kept at bay in most parts of the country, it becomes a problem in China where there are lockdowns and this could upset the supply chain balance causing disruptions. “There’s a dark cloud of uncertainty over this meeting, but at the end of the day, they know they’re at zero,” said Jim Caron, a chief fixed-income strategist on the global fixedincome team at Morgan Stanley Investment Management. “The economy is coming into full employment
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he FED is expected to raise the interest rates by a quarter-point. This comes as a major move to reverse the extraordinary easing it had put in place two years ago just to help the economy stay stable during the pandemic years.
