In June 2022, Inflation reached 9.1% highest in the last 40 years mainly caused by rising energy prices.
To control inflation, Federal Reserve hikes interest rates. Till now in the last 6 months, Fed has increased interest rates by 2.25%
Fed is raising the interest rate again by 75 basis points at July FOMC Meeting. That day market reacts positively.
Many economists and market participants believe that Fed’s aggressive rate hike policy could cause a recession in near future.
The interest rate hikes have a huge impact on the economy as the credit cost increases across the markets.
The Stocks & Crypto is already down - S&P 500 fell 15% & Bitcoin fell almost 70%
Higher borrowing costs cause a steep drop in the Housing Market. Which also decreases the rate of Real Estate and property might be cheaper.
Q1 2021: +6.3%
Q2 2021: +6.7%
Q3 2021: +2.3%
Q4 2021: +6.9%
Q1 2022: -1.6%
Feb 2022: 59.9%
March 2022: 60.1%
April 2022: 60%
May 2022: 60.1%
June 2022: 59.9%
The market participants will closely watch the fed’s future monetary policy. If the rate change, we might see a big impact on the market.
Well Yes, If fed rates increase aggressively it causes recession and it will affect you badly. You may be lost job, or not be able to pay EMIs.
I think cash is the king during the recession. Calculate your family's monthly expenses and multiply by 12 months (That's the emergency liquid fund you needed)