How does the Federal Reserve’s decision to raise interest rates impact the stock market?
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How does the Federal Reserve’s decision to raise interest rates impact the stock market?
Updated:02/07/2024
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1 Answers
SolarSeeker
Updated:25/06/2024

Basically, when the Fed raises interest rates, it generally means they’re trying to slow down inflation. Now for us everyday folks, think of inflation like too much money chasing too few goods, stuff gets pricier. So, the Fed jacks up the rates to make borrowing more expensive and cool down the spending. On the stock market side, higher rates can make people nervous. Investors think things might slow down, businesses might not borrow as much for growth because it costs them more, and consumers might tighten up their wallets too. So, in many cases, stocks could drop a bit right after the hike. But it’s not always a nightmare; sometimes, it’s just the market adjusting. Also companies with strong fundamentals can still do well. It’s kinda like weather, a bit unpredictable but there are patterns.

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