8 hikes in 2022, it can be an earthquake for mortgages and stock exchanges

The Federal Reserve raised the cost of borrowing by a quarter of a point yesterday. The effects could be very marked.

It is the first time since 2018 and overall there will be eight increases over the course of the year. An unprecedented squeeze in recent history and on many fronts a real earthquake is announced. Inflation is really too high. In the United States there was 10% inflation while in Italy we are at 6%.

But it is important to underline that this is a completely theoretical 6% because many economists argue that after the Ukrainian chaos in reality the current values ​​are closer to 10%. The American Central Bank could not sit idle and after being widely criticized for not intervening earlier on inflation, it has now started with this strong tightening on rates.

Strong squeeze on rates

If the Fed actually keeps its promises, the effects on the stock market but also on the whole economy in general could be very strong. First of all, the Fed s rate hikeignites that inflation is likely to fall. In fact, if inflation has reached these record levels it is precisely because theand central banks have not yet intervened in any way to stem it. An anomalous policy that has been extremely criticized. But with this sharp rise in rates, inflation both in the US and indirectly in Italy could also decrease.

Turbulence could come on the stock market

For the stock exchanges, however, there could be moments of strong turbulence. Indeed the bags are grown in a decidedly anomalous way inflated precisely by the zero rates of the United States central bank.

If the squeeze actually comes now, the stock exchanges could return to more normal levels and therefore a decline and perhaps even a small collapse could actually occur. This is also because the international situation really is thesis is without the support of the Central Bank for the stock market it is difficult to resist these values. But when it comes to interest rates, there is always a strong fear of mortgages.

Mortgage fear

Let’s clarify immediately that the European Central Bank is in very different positions from those of the American Central Bank, in fact, the ECB has stressed that rates in Europe will remain at zero. Therefore, at present, those with ongoing mortgages risk absolutely nothing because the European Central Bank wants to keep rates low to the ground and consequently mortgages in Italy should remain at current levels. The only fear that those with a current mortgage must have is that inflation here will increase and force the European Central Bank to follow in the footsteps of the US one.

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