If the Federal Reserve Hikes Interest Rates in 2026, History Has Good and Bad News for Investors
The market has likely already baked the expectation of a single rate hike before the year ends into share prices.
Overview
Interest rates are the primary tool that the Federal Reserve uses to calm or jump-start the economy. When it cuts its benchmark rates, markets usually rise, as lower costs to borrow spur companies to invest, transact, and acquire. That, in turn, leads to economic growth and, typically, rising stock prices. That's the good news.
When the Fed raises rates, though, markets tend to react negatively, because when the costs of borrowing go up, it increases expenses, drags on earnings, and can deter companies from making investments. That's the bad news.
Details
But it's never that simple.
Source
Originally published at www.fool.com.
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Disclaimer: This article is for informational purposes only and does not constitute investment advice. Data may be delayed up to 15 minutes. Past performance is not indicative of future results. Consult a licensed financial advisor before making investment decisions.