Fed Chair Changes His Tune

Fed Chair Changes His Tune
Powell’s testimony to Congress may be telling.

Provided by Rita Wilczek

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, speaking to your financial professional may be a smart move.
 

Rita Wilczek may be reached at (952) 542-8911 or rwilczek@hirep.net

The forecasts or forward-looking statements about the 2022 interest rates are based on assumptions, subject to revision without notice, and may not materialize. This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations

1. Reuters.com, November 20, 2021

2. BLS.gov, November 10, 2021

3. WSJ.com, November 30, 2021

4. CNBC.com, November 10, 2021