The stock market has been witnessing wild swings lately due to concerns over multi-decade high inflation and the Federal Reserve’s tightening monetary policy. This month, the Fed increased its benchmark interest rate by 75 basis points to tame the inflationary pressure. Moreover, additional interest rate hikes are expected in the coming months.
According to economists polled by Reuters, the Fed is expected to lift interest rates by 75 basis points next month, followed by 50 basis points in September. The Fed’s clamp down on inflation is raising the odds of recession, further leading to heightened volatility in the market. The CBOE Volatility Index has gained 57.8% year-to-date.
