Market update: Interest rates on the rise

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We saw continued stock market volatility this week, likely driven by ongoing concerns around global trade. If you’re growing tired of these ups and downs, you’re not alone. But please be assured that short-term volatility is normal, and the market has historically always come back and achieved gains over the long term.

Also, the MoneyLion Plus investment approach is designed to help you save $2,000 in two years, across all types of market conditions. We believe that MoneyLion Plus is a great way to stay on track to your goals by helping you consistently invest into diversified ETFs.

Let’s talk about interest rates and inflation

The latest Federal Open Market Committee (FOMC) minutes came out this week, sharing the results of the FOMC’s March meeting in which the Fed raised the federal funds rate to 1.75%. The minutes indicate that the FOMC expects the economy to strengthen and inflation to rise. (However, they specifically noted that they’re concerned about global trade uncertainty.) They also expressed that future rate hikes could be "slightly steeper" than previously anticipated.

In fact, the FOMC discussed whether the Fed should change its stance on monetary policy (i.e., what to do with interest rates) from “accommodative” to “neutral or restraining.” “Accommodative” means the Fed uses rates to support or increase economic growth, while “restraining” means the Fed uses rates to slow growth to correct inflationary problems. (Learn more in Five ways a federal rate increase affects you.)

The Fed is widely expected to hike rates again in June and likely in September. There’s also speculation that a fourth increase in 2018 may be added. We should learn more when the minutes are released after the next FOMC meeting, currently scheduled for May 1-2.

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