After an uber-aggressive 2022 that saw the Federal Reserve raise interest rates six times, all eyes have shifted to what we can expect from the Fed in the new year. In short, more of the same...at least at the start of the year. The Fed has already signaled continued rate hikes into 2023, but the questions are how many and how much? "The next Fed meeting is February 1st, and the market is pricing in a rate hike of one-quarter of one percent," says KTRH Money Man Pat Shinn. "The next meeting after that is March 22nd, and the market is pricing in another quarter-point rate hike."
What happens after that is up for debate. "That is precisely where there is a difference of opinion," says Shinn. "About one-half of the market thinks (the Fed) is done at that point, while the other 50 percent think there is one more rate hike to go after that."
A lot of the Fed's actions later this year will depend on other economic factors, like inflation, economic growth, and unemployment. "The one thing in the economy that continues to be very strong is jobs," Shinn tells KTRH. "The big question is will the Federal Reserve pause on their rate hikes, even if the jobs market is still good."
Either way, investors and the public should brace for higher interest rates for the foreseeable future. "A year ago I was telling people that if they wanted to borrow money, now is the time before rates go up," says Shinn. "Today, I'm going to say the opposite...if you want to lend out your money, now is the time."
"Bottom line, it's a good time to loan out your money, not a good time to borrow money."
Photo: Dorwart, Mike (uploader)