As logistical bottlenecks worsen due to extended lockdowns across major Chinese cities, and with the continuing Russia-Ukraine conflict, the high inflationary environment is expected to continue for the foreseeable future. To tame the runaway inflation, the Fed plans to raise the interest rates several times in the coming months.
Federal Reserve Chairman Jerome Powell said, “We’re really going to be raising rates and getting expeditiously to levels that are more neutral and then that are actually tight.” Though many Fed officials believe the U.S. economy can withstand the monetary policy tightening, the stock market is expected to experience significant pressure in a rising rate environment.
