The Balance Today: News You Need To Know on Oct. 21, 2022

How Aggressive Will the Fed’s Next Steps Be?

A woman sits cross-legged on a bed, with her laptop in front of her. She has her credit card in one hand and is looking at her cell phone, which is in the other.
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We’ve talked before about the Federal Reserve’s future moves: namely, that they will continue to hike interest rates as long as inflation remains stubbornly high. But how aggressive is the Fed going to be? 

A new report from The Wall Street Journal has investors increasingly nervous that the Fed will hit us with another jumbo rate hike next month to the tune of 75 basis points. Markets are now pricing in a more than 90% chance the Fed will raise rates by 75 basis points, according to fed fund futures data.

What does a 75-basis point hike mean for you anyway? While we know higher interest rates will send mortgage rates, credit card rates, and other loan rates higher, more aggressive rate hikes will send those rates soaring faster. And more worryingly, it not only increases the likelihood of a recession but might send us there more quickly.

You might be thinking to yourself that none of this impacts you. Perhaps you don’t have credit card debt and you own your home outright. But a recession will impact us all (if it comes to that), and your portfolio could also reflect the angst that investors have around the current economic environment. 

This means there could be more volatility going forward but remember that it’s not a cause for panic. Remaining disciplined in your investing strategy will be necessary as we all try to get through the storm together.

This article originally appeared in 'The Balance Today' newsletter. You can get 'The Balance Today' delivered to your inbox daily, just sign up here.

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Sources
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. The Wall Street Journal. "Fed Set to Raise Rates by 0.75 Point and Debate Size of Future Hikes."

  2. CME Group. "CME Fed Watch Tool."

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