25 bps Rate Hike! Key Takeaways Here

The US Feds just raised interest rates by 25 bps to make it 5.00 - 5.25%! Here are the key takeaways!

- Real estate: Volume of homes bought and sold has decreased due to higher mortgage interest rates

- Tech industry (mid-sized and smaller companies): higher interest rates make future cash flows less attractive, causing stock prices and valuations to drop

- Manufacturing: output dropped by 0.5% in March, as higher interest rates reduce demand for goods bought on credit

- Banking sector: tightening of credit, affecting home loans, auto loans, and business loans

- Unemployment expected to increase to 4.5% by year-end, with over 1 million Americans losing jobs in the next eight months

- GDP expected to decrease, with a recession possible by the end of the year

- Federal Reserve raised interest rates to combat inflation, choosing recession over hyperinflation

- Two key data points considered by the Fed: PCE (preferred measure of inflation, up 4.6% year over year) and ECI (gauge of wages and benefits, increased by 1.2% in Q1)

- US consumer resilience is weakening, with people depleting savings and cutting back on discretionary spending

- Federal Reserve aims to lower inflation through economic retraction, with Q2 expected to show further degradation

- Stagflation (recession and elevated inflation) is a risk if inflation doesn't decrease

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