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What's Next for Interest Rates and Monetary Policy
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On this week’s episode of THE FINANCIAL COMMUTE, host Chris Galeski welcomes Managing Director of Investments Sasan Faiz to discuss inflation, interest rates, and monetary policy.
Here are some key takeaways from their conversation:
- Some people think that when inflation comes down, prices should decrease. That would be “deflation,” which is a concerning economic indicator. Inflation measures how much more expensive goods and services become over a certain period, so when inflation slows down, that means prices won’t increase as much or will stay the same.
- Sasan says the risk of stagflation (when inflation remains high while economic growth slows and unemployment increases) is currently high.
- Because supply chain disruptions were the main driver of inflation in 2021, the Fed’s attempt to slow inflation by raising rates did not have much of an effect.
- The Fed might lower rates if the economy weakens significantly, but they are cautious due to the current economic stability and low unemployment.
- High interest rates have made it difficult for housing development, thus keeping rents and prices high.
- Sasan advises listeners to consider opportunities in private credit markets which may offer equity-like returns with better downside protection.
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