Market Minute
Recent data suggests that inflation is becoming increasingly entrenched in the economy. High inflation is eroding real income and will weigh on consumer spending growth in coming quarters. In an attempt to keep inflation under control, the Federal Reserve has become more hawkish. The Federal Open Market Committee (FOMC) has already raised its target range for the federal funds rate to 150 basis points since March and we can expect more rate hikes this year and next year. While the underlying fundamentals remain solid so far, there is no doubt that an economic slowdown is forthcoming in the next few quarters. The question remains whether the Fed’s newfound aggressiveness will ultimately lead to a recession or just a soft landing.
Fed hikes its benchmark interest rate by 0.75 percentage point, the biggest increase since 1994: In an effort to combat inflation, the Federal Open Market Committee (FOMC) raised their target federal funds rate by 75 basis points last week to a range of 1.5%-1.75%, the highest range level since just before the Covid pandemic began in March 2020. The hopes are that demand can be tamed down so that supply can catch up. The economy could experience a period of slower growth during the process, however. The financial markets have been volatile, as a result, as an increasing number of market participants have been anticipating an upcoming recession in the coming quarters.
Bay Area Home Sales & Price Report - May 2022
