What will the Fed’s interest rate decision be? All markets are holding their breath waiting for this decision. Expectations are in two different ways, as predicted. Some, especially the economy newspapers, are united in the opinion that the Fed will not increase interest rates. Another segment, namely, a group led by Wall Street, citing the critical increase in inflation and thinks that the Fed will take a precaution in this regard.
On the other hand, if we look at the Fed side, the question comes to mind whether it will raise interest rates or leave it same as it is. Also, the Fed says the inflationary situation is temporary. Fed thinks that the markets are not saturated with enough cash. This may be true. Namely, in the current crisis, many gigantic companies are in a zombie state. Those are too big to sink. They are unable to return the interest on their debts. These companies are kept afloat by being constantly fed with cash. Constricting the cash flow by increasing the interest rates will put the stock markets where these companies are located in a very difficult situation and perhaps cause the bubbles in these markets to start to burst.
The Fed is actually at a crossroads. Either by continuing to print money, it will protect the markets from the bubbles that are about to burst for a while, in which case inflation will continue to increase, or it will suppress inflation while causing monetary contraction by increasing interest rates.
In fact, the strongest expectation is that the Fed will keep rates steady. So where does the money go in such a case? In this case, investors will direct most of their money towards gold, silver or cryptocurrencies. The Fed’s thinking on gold and cryptocurrencies in general is to suppress them.
The expectation of Wall Street experts is that the Fed will move in the direction that it will want to make the dollar stronger in this direction.
Finally, in this case, it would be best for risk-averse investors to wait for the Fed’s interest rate decision. On the other hand, if risk-lover investors act assuming the Fed’s rate hike, they can be expected to take a strong stance on the dollar side.