If you weren’t paying close attention, you might have missed it.
Fed Chair Jerome Powell dropped the word “transitory” when describing inflation during his recent testimony to Congress.1
Powell had told the story of transitory inflation for the past several months while the Consumer Price Index showed eye-popping, year-over-year gains of 5% to 6%.2
But now it appears that the Fed Chair has changed his tune.
Powell said that rising energy prices, higher rents, and strong wage gains could keep inflation elevated, though he maintained that inflation would decline sometime in 2022.3
So, does that mean it’s time for investors to prepare their portfolios?
Inflation and interest rates are only two factors in an overall investment strategy. And at this point, the Fed has only provided a rough timeline about when to consider raising short-term rates.4
As hard as it can be, sometimes wait-and-see is the best approach. Recent market volatility has been making headlines, which can be unnerving. If you find yourself second-guessing your overall approach, give us a call. We’d welcome the chance to hear your thoughts.
Ted de Groot, Spurstone Partner
1. Reuters.com, November 20, 2021
The forecasts or forward-looking statements about the 2022 interest rates are based on assumptions, subject to revision without notice, and may not materialize.
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite, LLC, is not affiliated with the named representative, broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.
Fed Chair Changes His Tune
January 05, 2022