👉 Background: We know the Reserve Bank of Australia just increased the official cash rate by 0.25% the other day... and everyone freaked out. Now, our copycat mates in the US have followed suit... kinda.

👉 What happened: The US Federal Reserve (aka the US equivalent of the RBA) just unleashed some v aggressive policy, increasing the benchmark rate by 0.5% (aka double what the RBA did!).

👉 What else: That's the biggest interest rate hike since Bye Bye Bye topped charts in 2000. Interestingly, the US' benchmark index the S&P500 closed 3% higher on the news, and the Nasdaq jumped a 'uge 3.2%! 🔥🔥

What's the key learning?

💡 When central banks set a new cash rate (or a 'federal funds rate' in the US), it can have a ripple effect across the economy and stock markets.  

💡 Increasing rates makes borrowing money more expensive, so people are less likely to take out loans and spend their coin. It's a major power move to control inflation. And while the effect it has on the economy takes around 12 months to really see, the stock market reacts pretty much immediately.

💡 Generally speaking, what tends to happen is when rates go down, the stock market goes up. And when rates go up, the stock market goes down. So, the S&P and Nasdaq rising was not expected... but it may just be instilling a little confidence in investors. Stranger things have happened 🤷‍♀️ .