Higher for Longer?

By Jonathan Steele

In the most recent Federal Reserve meeting, participants confirmed their stance that rates are likely to stay higher for longer. This is even after they raised rates 5.25% from their lows in the early 2020’s. Moreover, the Fed thinks that future short-term growth could be muted, raising the question of when will they cut rates to stimulate growth? As always, we are not going to try and time the top/bottom/direction of any cycle. With this said, we do have an opinion on what one can do in a higher-for-longer rate environment. (1) Try and keep your debt levels manageable and consider expecting the rate on this debt to be higher for a longer period of time. (2) Consider money market funds for cash positions. Not all funds are created equal so reviewing the safety of these funds is important. (3) Expect more volatility in markets, and try not to make any emotional decisions that could negatively affect your long term plan. (4) Consider fixed income (bonds) to lock in rates that are much more attractive than even two years ago. (5) If interest rates do fall, stocks could benefit considerably. Therefore, if you are investing for the long-term, don’t assume the 4-5% you are making on a money market fund will last forever – consider moving some of this longer-term money into a balanced portfolio.​​​

The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor.

The views expressed in this commentary are subject to change based on market and other conditions. These documents may contain certain statements that may be deemed forward‐looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur.