Fed is expected to hike interest rates , but inflation is the wild card for markets





The article examines the implications of Interest rate cuts by the Federal Reserve Bank of USA. The Fed is expected to raise interest rates but the recent slowdown in inflation has become a red flag for markets which doubt the Fed’s ability to hike a second time before year end. In an attempt to balance excess money supply, Employment and disinflation, the Fed is taking measured steps for the rate hike.

The topics covered are relation between Interest Rate, Investment, Saving, Inflation and consequences of Contractionary Monetary Policy. Explain through National Income equation and Macroeconomic diagrams.

Evaluation will include effectiveness of Contractionary Monetary Policy on Consumers, Producers and Government through Unemployment, Inflation, Investment and Economic Growth in Short Term and Long Term.