Fed Decision Looms as Investors Weigh Rate Hike Risks and Benefits

The Federal Reserve's decision on July 29 will have significant implications for investors. The central bank is set to decide whether to change the federal funds rate, which can move markets. However, most long-term investors are advised not to worry about the outcome, as the best option may be to do nothing.

A rate hike could curb high inflation but also risk upsetting the already fragile U.S. economy. On the other hand, leaving the current targeted range of 3.5% to 3.75% unchanged might allow the economy's moving parts to continue functioning optimally given the current backdrop.

The fed funds futures market is betting there's a 64% chance the Federal Reserve will leave the rate at its current target and only a 36% chance it will be raised to between 3.75% and 4%. Standing pat might allow inflation to linger at uncomfortably high levels for a little while longer, but it's also less disruptive.

For true buy-and-hold investors, interest rate decisions don't really matter in the long run. Stocks worth owning for the long haul are worth owning against any interest rate backdrop, as their underlying companies' management understands how to navigate all economic environments.