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Inflation concerns in the US re-emerged after data showed the Consumer Price Index (CPI) unexpectedly inched higher in November month-on-month, but edged lower on an annual basis. The data bolstered expectations that the Fed will not pivot to rate cuts early next year.
To take advantage of the current high interest rates, you may allocate some additional money to fixed-income products like fixed deposits, bonds, debt mutual funds, Small Savings Schemes, etc.
As the market awaits Fed decision, expected later in the day, the market sentiment suggesting an expectation of stability in rates
The Federal Open Market Committee is poised to keep rates in a range of 5.25% to 5.5% at its two-day policy meeting ending Wednesday, a 22-year high first reached in July. The rate decision and an accompanying statement will be released at 2 p.m. in Washington. Chair Jerome Powell will hold a press conference 30 minutes later.
“The main reason why the Fed will be lowering interest rates next year is because if they do not and inflation comes down, that will be making the federal funds rate, in real terms, inflation adjusted even higher. I do not think they are going to want to do that.”