A few hours ago, the United States Federal Reserve increased its interest rate by a quarter of a point from 2.25% to 2.5%. Such an increase might seem small, but the move is the fourth increase this year and the ninth since it started normalizing lending rates in 2015. Central Banks usually increase interest rates to slow down the economy when there are signs of inflation (which is defined as a measure of when the buying power of currency starts to reduce).
There has been several calls of caution that have been made by analysts with respect to the US economy experiencing a stock market crash similar to, or greater than, the one experienced in 2008. One such analyst is J.P Morgan’s top quant, Dr. Marko Kolanovic, who had earlier on in the year pointed out that the likelihood of such a crash were low at least till the second half of 2019. He stated that the exact timing of the crash would be determined by the speed in which the Federal Reserve hikes interest rates and reverse bond purchases.