Late to address the inflation challenge, the Federal Reserve Board has made up for lost time by jacking up the federal funds rate (the rate banks charge each other for overnight loans) by 4.75 percentage points since March 2022.
The rate hikes have not yet slain the inflation bogeyman — but did succeed in crushing stock and bond markets in 2022. Now the Fed must also weigh the risks of a banking crisis and possible recession in determining its path forward. If there is one silver lining from the dramatic tightening of monetary policy, it is that much-higher rates have produced some attractive yields for investors in bonds and some other asset classes. “Investors have opportunities in all kinds of income-producing categories that they haven’t had for 15 years,” says Andy Kapyrin, co-chief investment officer of CI RegentAtlantic Private Wealth.
