The global central banks are tightening their monetary policy to tame inflation, but at what cost?

The global central banks are tightening their monetary policy to tame inflation, but at what cost?

The wall street major three indexes experienced a mixed performance amid fears that market volatility will keep rising. By the evening trading hours, the S&P rose by 0.22%; the Nasdaq composite gained 1.43% and the Dow Jones industrial declined by 0.13%.

On Wednesday, the Federal Reserve and central banks increased their interest rates by three quarters, the most significant interest hike since 1994. The global central banks are heading to an aggressive series of interest hikes expected to cause a market recession in the long term. Hours after the Fed chairman Jerome announced that the central banks lifted their interest rates by three quarters, the wall street railed as a direct reaction to the news.

Investors agree that taming inflation and dealing with the global macroeconomics issues are priorities, but the costs will be high. A large number of market economists, experts, traders and investors feel that the U.S. economy is slowing down. That might be due to the impact of rising energy and material costs due to the Russian military operation on Ukraine.

The experts believe that the fast switch from soft monetary policy to aggressive and tightening monetary policy might cause a recession in the U.S. The first sector or department will be real estate and tech companies. Due to rising mortgage rates, the aggressive hikes by the central banks will cause panic among real estate investors. It’s also been reported that U.S home sales declined for three consecutive months, heading to the fourth one. The U.S. mortgage rates rose sharply after Mai’s interest hikes, and it’s expected to set new high records by June.

As for the U.S. benchmark, it officially hits the bear market as of June the third. On a yearly basis, the benchmark is down by 23% and is expected to surpass 26% by the end of the second quarter.

The U.S. effort on energy prices continues but without any measurable results. In terms of the future outlook about inflation, it’s not clear whether it has peaked or not. But one fact remains solid, and inflationary pressures will stay with us at least for three more quarters.

On Wednesday, U.S president Joe Biden says that he is all aware of the pâoin that the U.S. consumer is taking. Petrol and gasoline prices reached an all-time high in many stat in the U.S. Brent is still above $100 per barrel, and there are talks that the OPEC members will work on increasing the daily producing barrel to cover the Russian oil in the Market.

The labour market is also catastrophic; several reports confirm that significant industries are forcing workers out because they can’t afford the labour cost anymore.

The market demands remain high, whereas the producing powers declined because of the rising costs of materials and energy prices.