Interest rates around the world are on the rise as central banks seek to reduce inflation and help their economies grow. For investors, the most important takeaway from today’s Federal Reserve meeting was that Interest rates will remain low for the foreseeable future. However, some analysts believe that the Bank of England may end its run of 10 consecutive interest rate rises soon. The consumer prices index fell to 10.1pc last month, more than double the Bank’s 2pc target.
For investors, this could mean that the stock market could remain volatile in the short term, as investors try to adjust to the new environment. With the U.S. Dollar Index ($DXY) falling to 102.86, the value of the U.S. dollar has weakened, making it more attractive to foreign investors. This could lead to increased investment in U.S. stock and bonds.
For consumers, the consequences of higher Interest rates are becoming more apparent. Higher Interest rates have brought a surge in mortgage costs, with buy-to-let rates now at 5.95pc – more than double what they were a year ago. Consumer prices have also been rising, as companies grapple with higher costs from the rising Interest rates. The Australian dollar dropped 0.1% to 69.1 US cents, as the desperation of consumers to jack up prices far more than required to cover their own costs, has been compounded by the rising Interest rates.