The Federal Reserve Just Raised Interest Rates for the First Time Since 2023. Here's What History Says Happens in the Stock Market Next.
Will rate hikes send the bull market crashing lower?
Overview
Since taking over the role of Chairman of the Federal Reserve in May, Kevin Warsh has been adamant that he would deliver price stability. In the meantime, inflation has continued to climb higher, moving further away from the Fed's goal of 2% annualized price increases.
In his third Federal Open Market Committee (FOMC) meeting as Chairman, Warsh and the rest of the committee finally acted. They raised the target federal funds rate by a quarter point. The federal funds rate is the overnight rate at which banks borrow cash, and it affects most interest rates in the market. Raising the rate can help curb inflation, but it can also curb corporate earnings and job growth. Balancing the two is the job of the Federal Reserve.
Details
The rate hike is the first since 2023 and marks the first new rate-hiking cycle since the start of 2022. Here's how the start of a rate-hiking cycle affects the S&P 500 (SNPINDEX: ^GSPC), and what investors can expect this time around.
Source
Originally published at www.fool.com.