{"id":8231,"date":"2022-09-23T17:51:38","date_gmt":"2022-09-23T09:51:38","guid":{"rendered":"https:\/\/www.syfe.com\/magazine\/?p=8231"},"modified":"2024-04-02T13:42:56","modified_gmt":"2024-04-02T05:42:56","slug":"6-things-a-singapore-investor-should-know-about-the-fed-rate-hikes","status":"publish","type":"post","link":"https:\/\/www.syfe.com\/magazine\/6-things-a-singapore-investor-should-know-about-the-fed-rate-hikes\/","title":{"rendered":"6 Things A Singapore Investor Should Know About The Fed Rate Hikes\u00a0"},"content":{"rendered":"\n
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By now, you should have seen the headlines. The Federal Reserve has raised US interest rates by another 0.75% and vowed to keep hiking rates for longer. <\/p>\n\n\n\n

Need a quick lowdown on what\u2019s happening? We\u2019ve got you covered.  <\/p>\n\n\n\n

  1. The September rate hike<\/a><\/li>
  2. Will interest rates continue to rise?<\/a><\/li>
  3. The Fed dot plot, explained<\/a><\/li>
  4. Is a recession coming?<\/a><\/li>
  5. Why did the stock market fall?<\/a><\/li>
  6. How will Singaporeans be affected by the rate hikes?<\/a><\/li><\/ol>\n\n\n\n

    1. Another jumbo rate hike<\/strong><\/h2>\n\n\n\n

    On Wednesday, the Federal Open Market Committee (FOMC) raised benchmark interest rates (also known as the federal funds rate) by another 0.75%, its third straight rate hike of this magnitude. <\/p>\n\n\n\n

    The move is intended to combat inflation, which is now at a 40-year high in the US and running at more than three times the Fed\u2019s 2% inflation target. <\/p>\n\n\n\n

    The Fed\u2019s benchmark interest rate – which is what banks charge each other for overnight loans – is now at a range of 3% to 3.25%, the highest level since the 2008 global financial crisis. <\/p>\n\n\n\n

    For a sense of how quickly the rate has climbed this year, the federal funds rate was set at near-zero as recently as March 2022.<\/p>\n\n\n\n

    2. Will the Fed raise interest rates further? By how much?<\/strong><\/h2>\n\n\n\n

    Fed projections indicate that officials expect to raise rates by at least 1.25% during the remaining two policy meetings of 2022. This suggests that another 0.75% rate hike could be possible at the November FOMC meeting, followed by a 0.50% hike at the December meeting.<\/p>\n\n\n\n

    Based on the Fed\u2019s dot plot, the central bank is likely to keep raising interest rates well into 2023, and rate cuts are not foreseen until 2024.<\/p>\n\n\n\n

    \u201cThe FOMC is strongly resolved to bring inflation down to 2%, and we will keep at it until the job is done,\u201d Fed Chair Jerome Powell declared during his press conference.<\/p>\n\n\n\n

    3. Wait\u2026 What is the Fed dot plot?<\/strong><\/h2>\n\n\n\n

    The dot plot shows the Fed\u2019s outlook for the path of interest rates going forward. Each \u201cdot\u201d represents where each Fed official thinks the rate should be. <\/p>\n\n\n\n

    \"Fed
    Image credit: Federal Reserve<\/figcaption><\/figure>\n\n\n\n

    Here\u2019s how to read the dot plot.<\/p>\n\n\n\n