It’s no secret that we are currently in a high interest rate environment. The Federal Funds rate, the benchmark rate in the U.S. set by the Federal Open Market Committee (FOMC), currently sits between the range of 5.00% and 5.25%. As high as rates are, however, we may be due for even tighter monetary policy this year.
Inflation in the United States has come down from its peak of 9.1% in June 2022 to around 4% today. It remains higher than the Federal Reserve’s 2% inflation target. The Fed has repeatedly expressed its view in 2023 that this goal will not change any time soon. The plurality of FOMC participants believes that we are due for a 5.75% fed funds upper bound by the end of the year.
If this forecast comes to pass, we are due for the highest interest rates in over two decades. While rates on financial liabilities are likely to keep climbing, investors can employ various strategies to potentially benefit from this new economic reality. Here are three strategies worth considering…
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