by Alex Broudy, Technical & Financial Writer
Mar 31, 2022
In March 2022, the Federal Reserve issued its first rate hike in more than three years. This move increased U.S. interest rates by 0.25%, and reinforced the market expectation that more rate hikes are coming. So, what are interest rate hikes and why do they matter to investors?
Interest rates are a key monetary policy tool used for controlling the pace of the economy. Interest rate hikes are used to combat inflationary pressures like the rising cost of essential goods and services, while rate cuts are used to lower the cost of doing business and accelerate economic growth.
For investors, rate hikes affect the amount of interest that businesses must pay to service loans. Businesses with large, outstanding loans tend to be devalued when there are rate hikes. However, businesses with solid balance sheets often outperform.1 Investors should pay attention to how businesses in their portfolio perform as rate hikes continue, and adjust accordingly.
For digital asset security investors, keeping track of performance with Securitize Markets2 is easy and transparent. Because trading is fully digital, key performance metrics are updated in real-time and investors can engage with their portfolio from anywhere with an internet connection. So, when interest rates change, investors can take action without skipping a beat.
Past performance is no guarantee of future results.
Securitize Markets is an SEC-registered broker-dealer, FINRA member and operator of Securitize Markets ATS, and an SEC-regulated Alternative Trading System (ATS).