The Federal Reserve just hiked interest rates to their highest level in 22 years. Here's how Wall Street is reacting, where the pros think investors should be putting their money, and why inflation isn't going anywhere anytime soon.
The spotlight is on Jerome Powell as investors try to anticipate what the Federal Reserve may do next.This story is available exclusively to Insider subscribers.The Federal Reserve hiked rates in July, and it could be the final rate hike of the cycle.The pros say investors should stay the course, and keep an eye on earnings.the 11th increase in interest rates since March 2022
Has inflation been tamed, or will it endure? Are policymakers satisfied, or is another hike coming in September? More immediately, although lower energy prices are translating to lower CPI right now, Allen says that isn't permanent — and rising energy costs will have a very real impact on inflation. In a note from Wednesday evening, Goldman Sachs chief economist Jan Hatzius pointed out that Powell made it clear any further hikes will depend on inflation data. Hatzius expects upcoming CPI reports to continue June's softening trend, which is why he believes that the July hike will conclude the cycle.
"We think recent data is consistent with the US policy rate peaking in July, as core CPI inflation slowed sharply in June. But any renewed signs of inflation strength in key data like the Employment Cost Index released on Friday and upcoming PCE inflation releases still have potential to extend the hiking path," Gill wrote.
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