While many think the Federal Reserve should ease up on the gas with raising interest rates, JPMorgan Chase President and Chief Operating Officer Daniel Pinto believe the U.S. central bank is on the right track in its quest to curb high inflation. And if the Fed’s rate hikes lead to a recession, so be it.
“That’s why when people say, ‘the Fed is too hawkish,’ I disagree,” Pinto told CNBC. “I think putting inflation back in a box is very important. If it causes a slightly deeper recession for a period of time, that is the price we have to pay.”
Pinto believes the Fed can’t let inflation get embedded into the economy and that a hasty return to easier monetary policy runs the risk of repeating the mistakes made in the 1970s and ‘80s. So, he expects the Fed to continue being aggressive with rate hikes and thinks the Fed funds rate will probably peak at around 5% (the rate is currently between 3% and 3.25%).
After implementing its third consecutive rate hike of 0.75% in September, Fed Chairman Jerome Powell said in a prepared statement that the U.S. central bank also “anticipates that ongoing increases in the target range will be appropriate.”
Pinto also noted that he doesn’t think the market has hit bottom.
″I don’t think we’ve seen the bottom of the market yet,” he said. “When you think about corporate earnings heading into next year, expectations may still be too elevated; multiples in some equity markets, including the S&P, are probably a bit high.″
As of Friday, the S&P 500 has fallen 21% so far this year.
An Active Assist
So, with the Fed likely to continue raising rates, even if it means a recession, long-term investors may want to be more proactive with their investments. That’s where active management can help. While passive strategies often lack the flexibility to adapt to changing market environments, active ETFs can offer the potential to outperform benchmarks and indexes.
“Active managers have the flexibility to take advantage of market volatility and add to favored positions when prices become more attractive,” said Todd Rosenbluth, head of research at VettaFi.
As part of its lineup of active exchange traded funds, T. Rowe Price offers a suite of actively managed equity ETFs, including the T. Rowe Price Blue Chip Growth ETF (TCHP), the T. Rowe Price Dividend Growth ETF (TDVG), the T. Rowe Price Equity Income ETF (TEQI), the T. Rowe Price Growth Stock ETF (TGRW), and the T. Rowe Price U.S. Equity Research ETF (TSPA).
T. Rowe Price has been in the investing business for over 80 years through conducting field research firsthand with companies, utilizing risk management, and employing a bevy of experienced portfolio managers carrying an average of 22 years of experience.
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