The Fed launched its third consecutive 75-basis-point rate hike last week, lifting its policy rate to three percentage points this year. Fed officials have been adamant about raising the rates to fight the multi-decade high inflation, even at the cost of a slowing economy. This has led to major benchmark indexes plummeting significantly last week.
Moreover, the aggressive rate hiking, coupled with the U.K.’s tax cuts last week, has caused the U.S. dollar to surge. “Such U.S. dollar strength has historically led to some kind of financial/economic crisis,” wrote Morgan Stanley’s chief U.S. equity strategist, Michael Wilson. However, the central bank officials have sloughed off rising volatility in global markets and said their priority remained controlling domestic inflation.
