Home » Stock Market Highlights: With inflation at a 40-year high, the Federal Reserve has been raising interest rates.
NEW YORK, May 23 (FintechZoom): The Dow climbed higher on Monday, as traders brought back into stocks after selling them earlier in the week. The strong showing came from big tech companies like Amazon and Google was also helped along by banks such JP Morgan who announced plans for increased investment which should provide support going forward.
JPMorgan Chase has announced that it will be producing more than $56 billion in net interest income during 2022, which is higher than what was predicted before. The bank lifted its guidance on annual performance.
The recent sell-off in banking stocks has been dramatic, but it’s not clear whether we’re heading for a recession. The Federal Reserve is set to step up the pace of monetary policy tightening and that should help keep things from getting too bad over here.
Energy stocks rose more than 2% thanks to a boost in energy demand. Shanghai has announced that it will reopen after two months of lockdown due to the Covid-19 scare, which could lead investors back into markets again with hope that this time their money won’t be wasted on unneeded hedges or bad investments like last year’s virus outbreak did which caused major glitches across many borders including India where millions lost jobs because businesses shut down.
President of the Kansas City Federal Reserve Bank, Esther George said she expects their target interest rate will be increased to 2% by August.
George said in a note “Fed policymakers have emphasized a commitment to act expeditiously to restore price stability, and I expect that further rate increases could put the federal funds rate in the neighborhood of 2% by August, a significant pace of change in policy settings. Evidence that inflation is clearly decelerating will inform judgments about further tightening.”
With inflation at a 40-year high, the Federal Reserve has been raising interest rates to rein in this economic threat. They’ve moved the value upward from close to zero to currently standing between 0.75% – 1%.
“The central bank’s job is to prevent persistent imbalances from feeding into inflation and unmooring inflation expectations,” George said.