U.S. stocks may fall further, and bond yields rise, as the Federal Reserve continues its current round of interest-rate hikes in coming months, according to an analysis published Monday by the San Francisco Fed.
The U.S. Federal Reserve building is pictured in Washington, March 18, 2008. REUTERS/Jason Reed/File Photo
Feb 6 - U.S. stocks may fall further, and bond yields rise, as the Federal Reserve continues its current round of interest-rate hikes in coming months, according to anFinancial conditions have already tightened significantly, starting even before the U.S. central bank began raising interest rates last March to fight 40-year-high inflation, as investors anticipated the Fed's actions.
Assuming the Fed follows through on its projections from December for the policy rate to go to 5.1% by May and for inflation to fall to 3.1% by then, the Fed will have delivered the sharpest round of policy tightening on record, the San Francisco Fed researchers wrote. Though stock prices historically tend to rise at the tail end of Fed policy tightening cycles, this time may be different, according to the analysis from San Francisco Fed senior research advisor Simon Kwan and research associate Louis Liu.
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