With the Fed raising rates, how high will rates go?

With the Fed raising rates, how high will rates go?

The media keeps front and center the issue of how many interest rate increases by the Federal Reserve are coming and how high those increases will be. However, no one knows for certain how far up interest rates might go.

The interest rates for which there is sometimes clarity are the federal funds rates. The federal funds rate is the rate that banks, credit unions, and other institutions charge each other for overnight loans of reserves deposited at the Federal Reserve (the Fed). The Federal Reserve uses its operations to get these super short-term rates within its target range. It does not directly set the rate. The rate is negotiated between institutions on the open market.

Because the Fed’s target rates affect the costs lenders incur, changes indirectly affect the rates lenders charge. Again, the Fed does not directly set rates for auto loans, mortgages or interest paid on bonds. Those rates are determined on the open market.

…the Fed does not directly set rates for auto loans, mortgages or interest paid on bonds. Those rates are determined on the open market.

In many cases, the Fed will signal to the market what changes to the target range they have in mind. As a result, market absorbs this information and rates change before the Fed acts. Often, there is a disconnect between the Fed’s action and how one might think interest rates would change. That was the case for the most recent .75% increases. Instead of interest rates rising, many key rates fell.

The Fed announced it would raise its target .75% on June 15th and announced another .75% increase on July 27th. According to Mortgage News Daily, rates on 30-year fixed loans were at 6.28 on June 15th yet were down to 5.13 as of July 29th.

A similar effect occurred with the interest payable on U.S. Treasury securities. For instance, on June 15th, five-year U.S. Treasury bonds yielded 3.38% and by July 29th, the rate had dropped to 2.7%. If you had abandoned those bonds out of fear of higher rates, you would have missed an increase in the value of a bond over that period.

There is a media lesson here that is important. In mid-June as those rates were reaching recent high-water marks, the media was awash with stories about how the Fed would raise its target and these rates would continue higher. It was an easy narrative to tell. Inflation is high so the Fed must raise rates and therefore other rates will follow. That may be the case going forward but so far that storyline has been dead wrong.

The point here isn’t to mock yet another set of forecasts that didn’t materialize and say don’t listen to those people that got it wrong. It’s to encourage you to note how short term all this discussion about rates is and encourage you to stay focused on the long term. You shouldn’t care who was right about such short-term market moves. You do not need a short term forecast of rates, inflation, the economy or the stock market to have a good outcome if you have a sound plan and stick to it.

Making News…

In the News…

The Orlando Business Journal gave our firm two pieces of recognition in July. Moisand Fitzgerald Tamayo, LLC was named to the 2022 OBJ Fast 50 for being one of the areas fastest growing privately held companies and its 2022 Golden 100 list of Central Florida’s largest privately held companies. “These companies … have proven their ability to withstand economic crises time and time again.” wrote Denise Hicks, Research Director of the Orlando Business Journal

Moisand Fitzgerald Tamayo, LLC was again listed in Financial Advisor magazine’s ranking of independent firms in the U.S. This is an annual listing based upon assets under management. We came in at #343 which is a comfortable spot for us. While we are growing and will continue to grow, we seek only responsible, manageable growth, preferring quality over quantity.

Daniel B. Moisand, CFP fee-only financial advisorMoisand speaks at Retirement Conference: On May 26th, Dan Moisand,CFP® served as a panelist during Financial Advisor magazine’s Next Chapter: Rocking Retirement virtual conference. Dan had been a retirement columnist for the publication for 10 years prior to taking a sabbatical to Chair the Board of Directors of CFP Board, the body that grants the CFP® marks in the U.S.  The session, “It’s Time to Retire” – Top Advisors Riff on THE Conversation, covered “No planning stage is more complex and emotional than retirement. Two top advisors talk about key moments in the process, what they have learned counseling pre-retirees and how to think about that ‘next chapter’.”

If you are a member of an organization in need of a personal finance speaker, we are happy to talk with your group’s organizers about helping out at no cost.

CNBC reporters rely on us for many of their stories.   Charlie Fitzgerald, CFP® was tapped for a couple of pieces, What a bear market means and Do you want to know how inflation impacts your savings? The ‘rule of 72’ may help

DJ Hunt, CFP® helped out with Millennials’ average net worth doubled during pandemic, report finds – CNBC and Tommy Lucas, CFP®, EA contributed his thoughts to With inflation causing college costs to spike, these tax tips may help – CNBCExperts answer three tricky questions about Series I bonds – CNBC, and Still missing your tax refund? You’ll soon receive 5% interest

MarketWatch tapped Dan Moisand,CFP® for his thoughts on Financial planning for children with disabilities is stressful — here are some resources for parents

Things We Found of Note

About 70% of current retires wished they had saved more or invested more earlier, according to a recent retirement survey by the Employee Benefit EBRI Research Institute (EBRI).
According to new Census Bureau data, 40% of Americans do not have a retirement account.

Of those with a 401(k) plan, the median balance (half the people have more, half less) for persons age 55- 64 is just $89,716.


 Contact Us

Moisand Fitzgerald Tamayo, LLC is an Orlando, Tampa and Melbourne, Florida based fee-only financial planner serving central Florida and clients across the country. Moisand Fitzgerald Tamayo, LLC specializes in providing objective financial planning, retirement planning, and investment management to help clients build, manage, grow, and protect their assets through all phases of one’s life and the many transitions in between. If you have any questions or would like to discuss anything further, please give us a call or send us a note. If you are not a client and wish to receive emails notifying you of new posts – no more than once per month – fill out the subscription information in the sidebar to the right. For more frequent updates, follow us on FacebookLinkedIn, or Twitter.  

Important Additional Information & Disclosures

Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Moisand Fitzgerald Tamayo, LLC-“MFT”), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. 

Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from MFT. 

Please remember that if you are a MFT client, it remains your responsibility to advise MFT, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. MFT is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. Tax advice is given only to clients and only when agreed to by MFT. A copy of the MFT’s current written disclosure Brochure discussing our advisory services and fees is available for review upon request.

Please Note: MFT does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to MFT’s web site or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.

Please Note: Limitations:  While MFT does NOT pay for recognition, awards, or publicity, neither rankings and/or recognition by unaffiliated rating services, publications, or other organizations, nor the achievement of any designation or certification, should be construed by a client or prospective client as a guarantee that he/she will experience a certain level of results if MFT is engaged, or continues to be engaged, to provide investment advisory services. Rankings published by magazines, and others, generally base their selections exclusively on information prepared and/or submitted by the recognized adviser. Rankings are generally limited to participating advisers. No ranking or recognition should be construed as a current or past endorsement of MFT by any of its clients.  ANY QUESTIONS: MFT’s Chief Compliance Officer remains available to address any questions regarding rankings and/or recognitions, including providing the criteria used for any reflected ranking.

Historical performance results for investment indices, benchmarks, and/or categories have been provided for general informational/comparison purposes only, and generally do not reflect the deduction of transaction and/or custodial charges, the deduction of an investment management fee, nor the impact of taxes, the incurrence of which would have the effect of decreasing historical performance results.  It should not be assumed that your MFT account holdings correspond directly to any comparative indices or categories. Please Also Note: (1) performance results do not reflect the impact of taxes; (2) comparative benchmarks/indices may be more or less volatile than your MFT accounts; and, (3) a description of each comparative benchmark/index is available upon request.


About Dan Moisand

Dan Moisand is a fee-only financial advisor with Moisand Fitzgerald Tamayo, LLC. He is a regular contributor for multiple outlets, including Florida Today, MarketWatch, and The Wall Street Journal. His writing and financial advice have also been featured in Financial Planning, Investment Advisor, Wealth Manager/Advising Boomers, Forbes, Smart Money, and The New York Times, among other publications. He is the only two-time winner of the Journal of Financial Planning’s “Call for Papers” competition and has been named a top financial planner and advisor by multiple publications. Investment News named Dan one of the “twenty most influential men and women” in the history of financial planning. He currently serves on the Board of Directors for the CFP (Certified Financial Planner) Board.


As a Sanctuary From The Noise®, we only post information we believe timely and important to the long term financial success of our clients. Follow us to receive emails - no more than once a month - about new posts.

We keep your information private and make stopping our emails as easy as starting them.

Something went wrong. Please check your entries and try again.