According to credit rating agency Fitch Ratings, the financial sector is expected to benefit from an improving operating environment. However, the agency also expects a deterioration of loan asset quality as fiscal and policy support fades for banks and non-bank financial institutions (NBFI).
Furthermore, according to a non-profit organization, the Jubilee Debt Campaign, the Federal Reserve’s and other central banks’ aggressive rate hikes are likely to worsen the global debt crisis, which is expected to impact the global economic recovery from the pandemic. In addition, CFP Douglas Boneparth, president of Bone Fide Wealth in New York, cautioned that during interest rate hikes, “Financial services are generally attractive, but there’s danger in always saying this will happen.”
