Dow Jones tumble over 480 points as Powell comments given indication that rate hike in May-2022 could be 50 basis points.
FED really wants to bring inflation below 2%.
We expect FED interest rate by March-2023 will be between 2% and 2.5%.
Other than FED measures, USA needs to look for alternatives to China like Japan, South Korea, India, Vietnam, Taiwan to import products to USA.
Then China will not be able to decide price rates in USA.
USA became more dependent on China and if China companies increases prices then obviously products will cost more in USA.
Of course for the current inflation even Russia and Ukraine war also one important cause.
Russia and Ukraine war made crude oil prices , cooking oil prices, wheat prices, metals and chemical prices to surge.
All these factors also lead to high inflation across the World and not only in USA.
So in the month of May-2022, there is high probability to increase interest rate by 50 bps to control inflation in USA.
Globally most of Asian, Europe and USA markets tumble over 1%.
Do not expect any bull run in stock markets in 2022.
Long term investors can invest during corrections.
The interest rate hikes and reductions is a cycle and it is not one way road.
So in the second half of 2023 again stock markets will be good.
So long term investors can stay invested. Short term investors will have pain due to FED interest rate hikes.