The S&P 500 Index falls victim to the Fed’s policy in its battle against a high inflation rate

3 min readNov 2, 2022
  • The Federal Reserve increased the interest rates by 25 in their last meeting.
  • The inflation rate is still high.
  • The S&P 500 Index suffers as investors’ doubts about the Fed’s policy efficiency grow.

Since the Fed wasn't making much progress toward its goal, the hot topic got even hotter over time. The Federal Reserve raised the interest rate by 25 basis points in the last Fed meeting to reach the highest level of 3.25 since 2008, up from 3.00. Therefore, the increasing interest rates will increase the cost of long-term loans all across the economy.

Additionally, according to a May press release, the Federal Reserve is slated to gradually reduce its holdings of government debt and mortgage-backed securities, which started on the first of June, as another way to combat inflation.

On previous occasions, Powell said,

“Inflation has persisted longer than we thought, and of course, we’re prepared to use our tools to ensure that higher inflation does not become entrenched.”

None of us is immune to inflation’s effects on our wallets. The economy and individuals’ financial situations are both negatively affected. Charlie Munger, an American…