Updated: May 6, 2022
While we were sleeping last night, something huge happened in the US economy…
We’re talking about the Fed raising interest rates!
Last night, the Fed decided to raise interest rates by 0.5%.
Check out all the news headlines about this:
If this is your first time hearing about the interest rate hike, let me explain more.
Put in a simple way, the Fed interest rate is the interest rate that the US government suggests for banks.
When the Fed interest rate goes up, the stock market generally goes down. When the Fed interest rate goes down, the stock market tends to go up!
But you might be thinking:
“Then why did the market go up last night?”
The answer is this: the analysts in the market thought the Fed would increase the interest rate by 0.75%, but they only decided to raise it by 0.5%.
This means the interest rate hike was LOWER than what the market expected.
Here’s what the Fed Chairman Jerome Powell said:
“Seventy-five basis points is not something the committee is actively considering…”
What does this mean for investors like you?
It means the US government is trying to control the rate of inflation, which might result in the market going up less fiercely than before.
As an investor, this means your portfolio might not grow as fast…
Even if you’re holding on to great companies!