The latest Consumer Price Index (CPI) numbers for the month of August came out. And they weren’t good. Inflation increased 8.3% year over year, which is still incredibly high when you compare to the Fed’s 2% target (and historical inflation numbers in general). We haven’t seen persistent high inflation like this since the 80s.

So with inflation still being high, what can we expect? First, the Fed will likely continue to raise interest rates until it sees substantial improvement in inflation numbers. The issue with CPI is that the metrics are released on a 1-month delay, so there’s always the possibility of the Fed raising rates beyond what is necessary.

Higher rates will impact consumers and investors. For consumers, we can still expect high prices, and common household debt like auto loans, mortgages, and credit cards are going to become less affordable. For investors, as we’ve seen in the stock market, there’s a ton of uncertainty about our economic situation moving forward. Recession? Soft landing? No one is fully in agreement. But it’s not all bad for investors. Higher interest rates increase the yields of bonds and income-generating assets. So income may be a point of interest for investors looking for place to store excess cash. And remember, if you’re a long-term investor, the price declines we are seeing are only opportunities. So don’t worry!

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