8 Feb 2023
US Recession Indicator: Rising Interest Rates
- Posted by Dejan Pekic BCom DipFP CFP GAICD, Senior Financial Planner
Jerome Powell, Chair of US Federal Reserve increased interest rates 0.25% last week and Philip Lowe, Governor of the RBA increased interest rates by 0.25% yesterday.
Both have stated that they intend to continue to increase interest rates until the inflation turns down.
What does this mean? Trouble.
Financial asset prices are current surging upwards from last year’s lows in the expectation that inflation is coming under control expect the US Federal Reserve to reduce the size and frequency of interest rates hikes.
It still however does not means that asset prices will only increase from here.
Much of the current research points to a rapidly slowing US with the likelihood of a recession this year almost a certainty.
How server and how long will this US recession last is not known but it will negatively impact asset prices when it hits.
Click for charts.
The important point to remember is that even if the United States and or Australia do go into recession then it will become an even better time for investors to buy more quality asset at a discounted price.
If you have family, friends or colleagues that want financial advice please ask them to contact us and we will work out how best to help.
At Newealth we are always looking to support and promote our clients wherever possible and if you have any ideas or comments, please feel free to email me or to call me on +61 2 9267 2322.