In a strategic move, the United States Federal Reserve opted to maintain interest rates at their November meeting, holding steady at the highest levels seen since well before the global financial crisis (GFC) in 2008-09. Presently, the Federal Funds rate is situated at 5.25-5.5%, mirroring the United Kingdom’s 5.25%, while the European Union sets a new record at 4%.
The driving force behind this decision is the persistence of high inflation across the developed Western world. Notably, this inflation is proving to be remarkably persistent, with some financial experts, such as Ken Griffin from Citadel, foreseeing its endurance for a decade or more. In light of this, central banks are contemplating the possibility of prolonged periods of elevated interest rates.
A visual representation of the disparity between the inflation rate and wage growth in the United States from January 2020 to September 2023 is depicted in the accompanying graphic sourced from Statista.
Lucas Kiely, currently serving as the Chief Investment Officer for Yield App, assumes a pivotal role in overseeing investment portfolio allocations and spearheading the expansion of a diversified investment product range. Kiely brings a wealth of experience, having previously held the position of Chief Investment Officer at Diginex Asset Management and served as a senior trader and managing director at Credit Suisse in Hong Kong, managing QIS and Structured Derivatives trading. Furthermore, he played a significant role as the Head of Exotic Derivatives at UBS in Australia.
As economic indicators continue to unfold, the global financial landscape appears poised for a robust bull market. However, challenges loom on the horizon, particularly in navigating the complexities associated with the prolonged inflationary environment and the potential impact on interest rates.
