While Jerome Powell recently told lawmakers that interest rates will likely rise more than previously expected, a recession still might be avoidable given the robust economic conditions. Amid this backdrop, investing in ETFs Vanguard Developed Markets Index Fund (VEA) and Vanguard Mortgage-Backed Securities Index Fund (VMBS) could be wise for impressive returns.
Inflation cooled to 6.4% over the past year in January, down from 6.5% in December. It marked the seventh consecutive year-over-year slowdown and was far lower than the peak of 9.1% in June last year. The Fed opted for a quarter percentage point hike in its benchmark interest rate at the latest FOMC meeting, marking the smallest increase since March 2022.
With the economy’s resilience, even higher-than-expected interest rate hikes may not lead to a recession. Treasury Secretary Janet Yellen has expressed confidence in the economy’s ability to achieve a soft landing, owing to its robust labor market and the absence of balance sheet issues.
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