What Should I Know About Rising Interest Rates?

April 27, 2022

What should you know about rising interest rates? Stay calm. We have all the important information you need in this week's Arista Advice.

Hello, welcome to Arista Advice! Question of the week is: "Paul, what should I know about rising interest rates?"

The United States Federal Reserve Board, chaired by Jerome Powell, raised interest rates two weeks ago. They have a meeting in the next couple of weeks. They meet every six weeks, and they're going to give another indication that they're going to raise interest rates again.

Since Covid, the Federal Reserve stimulated the economy by lowering interest rates, and now it appears that they've overstimulated the economy, and they now need to start raising interest rates, and the Federal Reserve has gone from easy to neutral to now tightening. They're in the third phase of a three-phase economic cycle that the Federal Reserve is always managing.

There's two objectives of the Federal Open Market Committee. Their job is to keep unemployment manageable and to keep the monetary policy always flowing. Here is a chart from JPMorgan that came from the United States Federal Reserve website, helping us understand where interest rates will be going forward.

It's always important to not be overly concerned and skeptical about the Federal Reserve. There's a lot of naysayers out there. There's a lot of websites. I'm seeing and I'm visiting with a lot of people that are suffering from news-phobia. They're reading too much news. They're reading too much internet. They're watching way too much TV. I recommend that many of our clients and many of our prospective clients and people that were talking to on a regular basis. They go on a media fast. We highly recommend that they pull back their media consumption. Stay calm. Be calm. Go for a walk. It's spring! Like we are here today, get out. Enjoy the beautiful weather. See something, do something, go somewhere. Call someone. Call five people every day instead of spending 15 minutes on the internet overindulging yourself with media.

Interest rate hikes have occurred. They will continue to occur. The Federal Reserve is going to get ahead of inflation. They have the ability to meet unexpectedly in the meeting cycle. They've done it twice in my career. We'll probably see it in 2022. But remember, stay calm and take a long-term view, and a short-term world. Always remember to go to AristaWealth.com to get other videos, tools, tips, and resources to help you live a life of significance.