Fed Hiked Interest Rates by 75bp Last Week. What does this mean?
Ultimately, it means loans are going to be more expensive if you are seeking to borrow money, whether this is a home loan, car loan, or any other loan.

It also means you could see an increase in your APY (annual percentage yield) from your bank's savings account. Your bank might have sent you a statement saying your APY is increasing which is a good thing. They are paying you more money to park it at the bank.

Now how does this impact the stock market?

The market often reacts negatively to interest rate hikes as it means money is more expensive for businesses to borrow to expand their operations. Like mentioned previously, this is the largest rate hike we have seen in the last 28 years, which shows The Fed Reserve is acting aggressively to try and slow down inflation even if it causes further compression of businesses. In rising interest rate environments, companies that are profitable often hold up better than non-profitable companies as they are able to withstand higher costs due to their profit margins. Right now, there is a lot of selling pressure on the market, and we saw further sell off late last week after the rate hikes were announced.
Investor from Nepal πŸ‡³πŸ‡΅'s avatar
Do you think only raising interest might solve the inflation?
Preston | Investor Insight's avatar
@investor_from_nepal I think it will help but we have other issues causing inflation as well: supply chain issues, oil production, and all the printing of money in 2020-2021. As the money supply increases, inflation also increases normally. Interest rates will slow down the money supply, but we still have supply chain and oil issues currently.

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