Are we in a “higher for longer” interest rate environment?
- In the early weeks of 2023, a disinflationary trend took hold, fueling a market rally and optimism for an impending pause in rate hikes. Volatility surged in March, however, following the failure of Silicon Valley Bank and perceived instability of the U.S. banking system. Should that instability continue, it could complicate the Fed’s ability to promote financial stability and measured inflation, adding yet another element of uncertainty to the outlook. – Saira Malik, CIO, Nuveen
- The Fed raised the Fed funds rate by 25bps to 4.75% – 5.00% assuring, “the U.S. banking system is sound and resilient.” The dot plots and Powell’s language suggest one more 25bp hike may yet occur. – Bob Doll, Crossmark Global Investments.
- Inflation remains elevated, with the Consumer Price Index (CPI) rising 6% in February and core services ex-housing inflation (which Powell has cited as the “most important” measure of inflation) up 5% year over year. The U.S. labor market has also shown resilience, with unemployment hovering near multi-decade lows and more than 300,000 new jobs added in February. The latest Summary of Economic Projections suggests that Fed governors expect only one more rate hike this year. But Powell reiterated the rate cuts were not in the Fed’s “base case.” – Capital Group / American Funds
As always, we continue to believe that one’s circumstances and risk profile should determine the appropriate mix of investments, and not media headlines. Please contact us if you ever have any questions or concerns about your accounts or any news you hear.
Information in this commentary is gleaned from third party sources, and while believed to be reliable, is not independently verified. This content is not intended to be tax, legal, investment or fiduciary advice. It has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. The strategies and/or investments discussed in this material may not be suitable for all investors. Bernardo Wealth Planning recommends that investors independently evaluate particular investments and strategies, and encourages investors to seek the advice of a financial advisor. Past performance does not guarantee future results.