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It’s 2024, and the “will they or won’t they” waiting game on inflation continues.
The Fed has said that it expects to lower its rate target up to three times this year, which is generally seen as a good reflection that inflation is easing.
And it is. The Bureau of Labor Statistics reported in December that the Consumer Price Index (CPI) increased just 0.3% in the last month of the year, following a 0.1% rise in November. Both reports were down sharply from expectations.
Good news, right?
Sure, but investors are overestimating the impact that rates have on their portfolios. Economic growth is always a good thing, but the ups and downs of the market are going to do what they do, especially over the long term.
Interest rates are just another aspect of volatility that investors need to address. They are not the be all and end all goal of portfolio construction. A well designed and protected portfolio will adapt to whatever happens with rates and inflation, just as it is intended to.
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It’s 2024, and the “will they or won’t they” waiting game on inflation continues.
The Fed has said that it expects to lower its rate target up to three times this year, which is generally seen as a good reflection that inflation is easing.
And it is. The Bureau of Labor Statistics reported in December that the Consumer Price Index (CPI) increased just 0.3% in the last month of the year, following a 0.1% rise in November. Both reports were down sharply from expectations.
Good news, right?
Sure, but investors are overestimating the impact that rates have on their portfolios. Economic growth is always a good thing, but the ups and downs of the market are going to do what they do, especially over the long term.
Interest rates are just another aspect of volatility that investors need to address. They are not the be all and end all goal of portfolio construction. A well designed and protected portfolio will adapt to whatever happens with rates and inflation, just as it is intended to.