In line with broad expectations, the Fed raised its short-term borrowing rate by 75 basis points to a target range of 3.75%-4%. The central bank’s persistent hawkish stance is laying the groundwork for interest rates to reach 5% by March next year, triggering a recession.
With increased interest rates set to hurt businesses by weakening demand and making borrowings more expensive, economic recovery and return of markets to stability seem unlikely anytime soon. Colin Graham, head of multiasset strategy at asset manager Robeco, remarked, “Everybody got so bearish; it’s like everybody’s on one side of the ship thinking things will never get better.”
