Don't fight the Fed. Be prepared for the policy decision.
There is a cliché on Wall Street: Don't fight the tape, don't fight the Fed.
Investors around the world are closely watching the latest decision of the Federal Reserve on Wednesday.
As concerns about inflation have intensified, CNBC Fed survey respondents believe that the Fed will announce its decision to cut interest rates on Wednesday and start raising interest rates earlier than previously predicted.
What's Fed tapering?
Buying assets-backed securities to stimulate economic recovery is one of tools used by the U.S. Federal Reserve to manage the health of economy.
Such asset buying, along with a low interest rate is called quantitative easing (QE). It's a way of pumping money into the economy.
When the Fed believes that they economy has recovered sufficiently, it will wind down asset purchases. This process is called tapering.
When the Fed believes that they economy has recovered sufficiently, it will wind down asset purchases. This process is called tapering.
What's the effect?
Reduction usually heralds the end of quantitative easing financial policies. And it’s a signal of monetary tightening.
In other words, the interest rate will rise and we need bear higher costs such as company borrowing costs, mortgages, auto and housing loans.
In other words, the interest rate will rise and we need bear higher costs such as company borrowing costs, mortgages, auto and housing loans.
Normally, the volatility of stock markets will increase as the tapering looms.
Knowing more about the Federal Reserve is also helpful for your trading.
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Knowing more about the Federal Reserve is also helpful for your trading.
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$S&P 500 Index(.SPX.US$ $Dow Jones Industrial Average(.DJI.US$ $Nasdaq Composite Index(.IXIC.US$
$S&P 500 Index(.SPX.US$ $Dow Jones Industrial Average(.DJI.US$ $Nasdaq Composite Index(.IXIC.US$
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Moomoo LearnOP Fynn SG: The Federal Reserve concluded its two-day meeting and announced plans to end its bond-buying program but keep rates unchanged at 2pm Eastern
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