![]() ![]() ![]() While today’s uncertain macroeconomic and geopolitical environment is creating risk in securities markets – particularly for fixed-rate assets – we believe it’s also generating compelling opportunities for investors able to withstand a bumpy ride.įigure 1: U.S. ![]() 2 Chair Powell answered in the affirmative and referred to his predecessorĪs “the greatest economic public servant of the era.” Powell’s response suggests that not only is he willing to take his foot off the gas – he’s also prepared to slam on the brakes. Price stability” like former Fed Chair Paul Volcker, who famously helped cause a double-dip recession in the 1980s by raising the federal funds rate to more than 20%. ![]() Senator Richard Shelby (R-AL) asked Chair Powell if he was “prepared to do what it takes without any reservation to protect This pressure was evident when Fed Chair Jay Powell gave the Semiannual Monetary Policy Report to the Congress on March 3. 1 That’s the highest rate in over forty years (see Fig. Which hit 8.5% in the year through March. This is partly because the war in Ukraine disrupted already-fragile supply chains and boosted commodity prices, putting even more pressure on the Fed to bring down the elevated inflation rate, Inflation rate, accelerated in the early months of 2022. The pace of this transition, like the U.S. economy was facing a challenging transitional period, as the Federal Reserve was set to tighten monetary policy just as the fiscal-policy-induced sugar high was wearing off. The economy is therefore transitioning into a new phase, in which businesses, consumers and investors will have far less government support. Its timeline for tightening monetary policy. But these trends are normalizing just as rapidly rising inflation is forcing the Fed to accelerate fiscal and monetary policy helped fuel abnormal economic trends, such as the massive spike in personal income, that boosted GDP growth in 2021. ![]()
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