Federal Reserve officials are signaling a readiness to raise interest rates, a shift that has historically preceded stock market corrections. Fed Governor Christopher Waller said the FOMC must be ready to tighten policy to prevent a repeat of the 2021-to-2022 inflation episode, while Chair Kevin Warsh acknowledged inflation has run well above the 2% target for more than five years. The median FOMC projection now implies one quarter-point rate increase in 2026, a reversal from earlier expectations of a cut. Since 1999, the S&P 500 and Nasdaq Composite have averaged maximum drawdowns of 10% and 15%, respectively, in the three months following the first rate hike of a tightening cycle.
Goldman Sachs Group IncHigher rates may boost net interest income but also risk economic slowdown and market correction, with mixed historical impact on banks.
JPMorgan Chase & CoHigher rates may boost net interest income but also risk economic slowdown and market correction, with mixed historical impact on banks.