The year of the rate shock
Financial markets are adjusting to higher rates. That does not mean the chaos is over
ONcE MORE for the cheap seats at the back. That way the lesson may sink in. After a strong run from mid-October, stockmarkets have tumbled yet again. The s&p 500, an index of American shares, has shed 5% since December 14th, when the Federal Reserve increased interest rates by half a percentage point and Jerome Powell, its chairman, said that policymakers had no plans to start lowering rates until they were confident that inflation was moving down to 2%. “The historical record cautions strongly against prematurely loosening policy,” he declared.
This article appeared in the Leaders section of the print edition under the headline “The year of the rate shock”
From the December 24th 2022 edition
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