Investing abroad has always been a popular option for investors looking to diversify their portfolios and increase their potential for returns. One of the most sought-after destinations for international investments is the United States, which is considered one of the world’s largest and most stable economies.
However, with the ongoing pandemic, the US economy has seen a significant downturn, and the Federal Reserve has taken various measures to keep the economy afloat. One such measure is the ongoing series of rate hikes that have been implemented by the Fed.
With the June 2023 meeting of the Federal Open Market Committee (FOMC) quickly approaching, investors are eagerly anticipating whether the Fed will continue with its rate hikes or not.
The 10 Consecutive Rate Hikes
According to recent reports, the Fed has raised interest rates for ten consecutive times since December 2015, making it one of the longest periods of rate hikes in the country’s history.
The latest hike was implemented in March 2023, with the target range for the federal funds rate now between 2.75% to 3.00%. Despite this, many analysts are still unsure whether the Fed will continue with another rate hike in June 2023 or not.
Factors Influencing the Fed’s Decision on June 2023 Rate Hike
One of the main reasons why the Fed may hold off on another rate hike is the ongoing concerns about the pandemic and its impact on the economy.
With the number of COVID-19 cases still on the rise in certain parts of the country, there is a fear that another wave of infections could lead to a slowdown in economic growth. The Fed may choose to wait and see how the situation unfolds before making any decisions.
Another factor that may influence the Fed’s decision is inflation. Inflation has been on the rise in the US, with the latest figures showing a 4.2% increase in the consumer price index (CPI) in April 2023.
While the Fed has maintained that this increase is transitory, it may still choose to implement another rate hike to curb any further inflationary pressures.
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However, some analysts believe that the Fed may choose to hold off on another rate hike in June and instead adopt a more wait-and-see approach.
The Fed may want to evaluate the impact of its previous rate hikes on the economy and ensure that the recovery is sustainable before implementing another hike. Additionally, the Fed may want to wait for more data on inflation to determine whether the current increase is indeed transitory or not.
Investing Abroad: A Cautionary Note
In conclusion, investing abroad remains an attractive option for investors looking to diversify their portfolio.
However, with the ongoing uncertainty surrounding the US economy and the Fed’s future rate hikes, investors should exercise caution and do their due diligence before making any investments.
While the June FOMC meeting is eagerly anticipated, investors should remember that the Fed’s decision is influenced by a variety of factors, and there is no guarantee that they will continue with another rate hike.