Too much spending coupled with too few goods caused inflation to rise rapidly, and it’s hanging on longer than most analysts anticipated. The standard antidote for inflation is to raise interest rates with the intent to cool spending. But what does that mean for investors? How long will it take before we see things start to change? How much will it hurt employment? Does the Fed have a plan for where they are going with rates so that the economy isn’t overly burdened? And will Russian-Ukranian war impact Fed’s decisions? Kathy Jones, Schwab’s chief fixed income strategist, joins Mike Townsend to discuss these questions and offer ideas for investors during this chaotic time.
Mike also looks at how a desire to get aid to Ukraine quickly could speed up efforts by the House and Senate to finalize a long-overdue package of appropriations to fund the government; how the hold up to confirm five members of the Fed may impact upcoming monetary policy decisions; what Judge Ketanji Brown Jackson’s path to confirmation to the Supreme Court may look like; and how some Members of Congress are still focused on fixing the state and local tax deduction.
No one is happy with the recent inflation run-up, least of all the Federal Reserve, whose mandate includes keeping inflation at a manageable pace. For this fight, one of the main arrows in the Fed’s quiver is to raise interest rates in hopes of curtailing spending and bringing prices back in line¬. But how much will it take, and how painful will that be for the economy? Kathy Jones, Schwab’s chief fixed income strategist, joins Mike Townsend to consider how far the rate hikes will go, what the impact may be on jobs and the markets, and how the new faces soon to join the Fed could impact the decision-making process at the central bank.
Mike also looks at how the stalled Build Back Better Act means that a host of tax increases that investors thought might go into effect in 2022 remain in limbo—and whether they might come back to life if a new version of the bill emerges. He examines the risk of a government shutdown as Congress scrambles to fund the federal budget ahead of a February 18 deadline. And he discusses emerging bipartisan support for measures to prohibit government officials from using inside knowledge for their personal investing.
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