How to Protect Your Portfolio as the Fed Raises Interest Rates
Historically, stocks see an initial pullback after the Federal Reserve raises rates.
Overview
The Federal Reserve recently hiked interest rates at its September meeting, and that is generally not good news for stocks. The Fed raised its target range by 25 basis points to 3.75%-4%, marking the first time it had increased the federal funds rate in more than three years as it looks to fight inflation.
Fed interest rate hikes are rarely one and done, and this looks like the start of a new tightening cycle. Fed Chair Kevin Warsh wants to return inflation to around 2%, noting that too many categories were running above 3%. Another rate increase is expected by year-end, and more could be coming in 2027.
Details
Aside from four outliers who expect rate cuts in 2027, the Fed's dot plot shows the majority of Fed members expect rates to end 2027 between 4.25% and 4.5%.
Source
Originally published at www.fool.com.