Fed Chair Expects “Bumpy” Road Ahead | ETF Trends

In its attempt to bring inflation down to 2%, the Federal Reserve announced its intention to raise interest rates by 25 basis points, raising the target range for the federal funds rate to 4.75% and 5%. While inflation has come down to 6% for the 12 months ended February from its peak of 9.1% in June, Fed Chair Jerome Powell said that the Federal Open Market Committee is still committed to bringing inflation down to 2% but noted that the path to that target “is likely to be bumpy.”

In a press conference on Wednesday, Powell said that while “inflation has moderated somewhat since the middle of last year,” inflation “remains well above” the Fed’s “longer-run goal of 2%.”

“The process of getting inflation back down to 2% has a long way to go and is likely to be bumpy,” he added.

Powell also addressed the recent banking crisis triggered by the collapse of Silicon Valley Bank. “Events in the banking system are likely to result in tighter credit conditions,” he said before adding: “it is too soon to determine and too soon to determine how policy will respond.”

Taking an Active Approach

If the path to bringing inflation down to 2% will indeed be bumpy as Powell suggested, it’s likely that market volatility will continue. That’s where active management can come into play.

While passive strategies lack the flexibility to adapt to changing market environments, active ETFs can offer the potential to outperform benchmarks and indexes. Plus, active managers with greater resources and greater scope benefit from economies of scale, which can often translate to better returns.

“During times of market uncertainty, advisors can turn to actively managed ETFs that offer security selection benefits as well as liquidity, tax efficiency and ease of use,” said Todd Rosenbluth, head of research at VettaFi.

As part of its lineup of active ETFs, 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 US Equity Research ETF (TSPA).

T. Rowe Price has been in the investing business for over 80 years, conducting field research firsthand with companies, utilizing risk management, and employing a team of experienced portfolio managers carrying an average of 22 years of experience.

For more news, information, and analysis, visit the Active ETF Channel.