The Federal Reserve is likely to leave interest rates high for a considerable amount of time, a move that would keep weighing down on stocks, according to Wells Fargo’s head of macro strategy.
Investors have been eyeing every Fed’s move in hopes that it will pause haking interest rates, after the central bank this year paved an aggressive path to tame high inflation.
“But I think the thing people really need to focus on the most is how long does the Fed keep that fed funds rate really high,” Mike Schumacher at Wells Fargo Securities said in an interview with Bloomberg TV on Monday.
“So let’s say up to 5%. We think it’s going to be a long time – six plus months, maybe a year. That’s going to hurt equities, we think, and that’s going to hurt risk,” he said.
Investors pushed stocks higher on Friday in a potential sign the Fed may decrease the size of its massive rate hikes after its meeting on November 1-2. The Federal Open Market Committee has raised the benchmark rate by 75 basis points at its past three meetings.
