Twelve months ago, economic forecasters were calling for a recession due to the rapid and dramatic increase in interest rates. Yet, the consumer remains strong. Unemployment is holding steady at 3.8% as of the August reading, and inflation has trended down to 3.7% from the 9.1% high in June, 2022.1 Should Americans simply get used to these higher rates or is there some reprieve over the horizon?
In 2022, global financial markets experienced significant declines resulting from rising rates brought about by high inflation. The Federal Reserve raised the short-term federal funds rate 11 times since March 2022 to combat inflation levels not seen in 40 years. The target range for the fed funds rate currently sits at 5.25%-5.50%.2
From 2004-2006 the Federal Reserve raised the fed funds rate 17 times finally landing on 5.25% in June 2006, the level we see today. Two years later, a global recession ensued driving down asset prices worldwide.
You can read the full article by Senior Portfolio Manager, Director of ESG Strategies Andy Drennen in the Springfield Business Journal. Shared with permission from the Springfield Business Journal.
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The views and opinions expressed in this article are those of Andy Drennen and are not endorsed by, and do not necessarily reflect the views of, Simmons Bank. Simmons Bank does not provide tax, accounting, or legal advice.