PART 1: FED SIGNALLING TO ANCHOR INFLATION EXPECTATIONS, UNLIKELY TO FOLLOW THROUGH
Source: Federal Reserve
The end of the hiking cycle is near given that the already high nominal policy rates is expected to put pressure on the economy in the months ahead.
“Impact of interest rate hikes on unemployment is felt between 18 and 24 months from the time of the first rate hike, which mathematically becomes June 2023 to December 2023” says Silverdale CIO, Sanjay Guglani.
The Federal Reserve is adopting a cautious approach to avoid prematurely proclaiming success in the battle against inflation and to effectively manage expectations of significant near-term interest rate cuts.
From investors perspective, higher starting yields imply that bonds are better prepared to absorb volatility and post positive returns. Attractive yields offer income potential across bond asset classes.
Listen to the full radio interview here: https://omny.fm/shows/moneyfm-morning-show/bigger-picture-fed-pause-a-comma-not-a-full-stop
*This is the 1st of the 4 key points touched upon by Sanjay in his talk on MoneyFM 89.3 on 15th June 2023.
Stay tuned for further updates on this post!
With our best regards, Team Silverdale