Bloomberg Asharq hosted David Darst, CFA and Chief Advisor to The Family Office, to discuss how markets reacted after the Federal Reserve (the “Fed”) raised interest rates. Below are the highlights of the interview:
- The Fed raised interest rates by 0.75%, which proved its determination to fight inflation and influenced markets positively at the beginning.
- Current inflation at 8.6% is expected to fall to 5% or 6% later this year. The monetary policies of the Fed should however exceed inflationary ratios to be able to fight inflation.
- Investors’ expectations of revenues rising by 9% or 10% will not happen in the upcoming year because inflation reduced profit margins.
- Caution should be exercised in the next phase. Earnings and revenues will rise, but pressures will also rise with lower asset and bond prices and higher interest rates to control inflation.
- The next phase will not be easy amid tightening policies, but it’s necessary to emerge from the current inflation.
Watch the full interview above.