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Fed rate hike fuels debate over when cash can be invested
The author says the FOMC lifted the fed funds rate after a late-2023 pause, and points to the dot plot for the possibility of one or two more hikes.
In a piece for ETF Trends, the author describes cash held aside after selling a home, saying the money is effectively idle while they run stock screeners and keep updating a growing watchlist. The article frames the decision as a trade-off between waiting for better prices and missing out on potential income and market returns.
The author also links their timing concerns to the Fed, saying the Federal Open Market Committee hiked the fed funds rate last week after being on pause since late last year. They note that doubts had been building about whether the Fed would act to return inflation to its 2% goal.
According to the article, Chairman Warsh declined to give direct answers about further hikes through the end of the year, but the dot plot suggests the committee is considering at least one more, potentially two. The author adds that higher borrowing costs can increase the cost for businesses to service debt, which is described as part of the reason investors may be waiting.