On March 22, 2023, the Federal Reserve raised the target fed funds rate from 4.75 to 5.00 percent. This marked a 475 bps increase in interest rates since March 2022. With the Fed’s next planned meeting scheduled for May 2023, many are wondering if the Fed will continue the trend of aggressive rate hikes, keep rates stable, or begin lowering rates.
Higher interest rates can have undesirable consequences, including costlier borrowing and an uptick in unemployment. They can also contribute to a bearish sentiment among investors, thus driving down stock prices.
In this article, we’ll discuss how the Fed makes its decisions regarding interest rates and whether we think it’s likely the Fed will raise rates in the coming months….