The Federal Reserve recently announced that for the first time in three years, it would increase short-term interest rates by a quarter of a percentage point. In addition, the Fed has stated that it would like to see short-term interest rates near 2% by the year’s end, which would mean a hike at each of the remaining central bank meetings this year.1
Many investors have been cheered by the Fed's aggressive move to combat inflation, but even Fed officials acknowledge that higher rates could slow economic growth this year. This cautious stance is no doubt due to the upward pressure on inflation the ongoing invasion of Ukraine has caused. There’s no surefire way to anticipate what the future will bring, but these recent moves by the Fed indicate that interest rates are heading higher.
1. Axios.com, March 17, 2022
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