the appropriate gift for a oneyear anniversary is said to be paper something fragile that needs careful attention to be preserved over time the metaphor for a new marriage could equally apply to the current state of the economy as last week marked one year since the federal reserve embarked on a series of hikes to shortterm interest rates by this time last year the fed had kept its benchmark rate near zero since the beginning of the covid19 pandemic to help stimulate economic activity but huge pandemicera injections of cash into the economy had caused rampant inflation so in march 2022 in an effort to slow the economy and cool inflation the central bank raised rates by 25 basis points bringing the target rate into a range of 025 to 050 it was the first of eight hikes that have pushed the benchmark rate range to 450 to 475 the intended result has been achieved to an extent inflation as measured by the consumer price index has shrunk to 6 from 85 a year ago that still puts it a long way from the feds target rate of 2 as the fed mulls whether to continue upping rates the central bank will have to consider the collateral damage rate hikes have brought to the economy markets and investors monetary policy is a blunt tool says ross hamilton a certified financial planner and vice president of wealth management at raymond james  associates in bethesda maryland theyve been feeling in the darkness for when things would break and recently with bank failures things are starting to break it muddies the picture of how theyll proceed the collateral damage of rate hikes for investors the feds task was always going to be a tricky balancing act to ease inflation the central bank needed to slow the economy but slow things down too much or too quickly and the economy could tip into recession for much of the past year investors were skeptical the fed could engineer a socalled soft landing guiding inflation down without triggering a recession among other factors fears of an economic slowdown led to a broad selloff in stocks in 2022 with the sp 500 declining 18 on the year at the same time because bond prices and interest rates move in opposite directions the feds hiking regime led to declines in the broad bond market the 13 decline in the bloomberg us aggregate bond index together with the fall in stock prices marked the first year that both stocks and bonds logged doubledigit losses since 1969 that spelled bad news for investors specifically conservative retirement savers who held a mix of stocks and bonds theres a general expectation that bonds are there to act as a ballast for stocks says hamilton that didnt occur last year investors got kind of a doublewhammy high rates help slow the economy by making borrowing more expensive which directly affects consumers as of march 17 2022 for instance the average 30year fixedrate mortgage was 42 higher than the midpandemic lows below 3 but still a much better deal than the 66 youll pay on average today buyers are realizing that the days of 3 mortgages are over and that 6 is the new normal says jr gondeck managing partner at financial advisory the lerner group people have had to take a collective deep breath and reassess expectations its gotten more expensive to hold a credit card balance too the average apr on a credit card is currently north of 19 compared with a rate of 146 in february of last year according to the federal reserve bank of st louis in recent weeks savers have felt the heat as well rising rates have eroded the value of many banks investments including treasurys mortgagebacked securities and municipal bonds when silicon valley bank recently sold bond holdings at a loss it triggered a bank run that led to the secondlargest bank failure in us history and brewing turmoil at regional banks nationwide with consumers and investors alike wondering whether deposits are safe where the fed and investors go from here even with the recent signs of instability in the banking sector the fed looks poised to approve a quarterpercentagepoint rate hike this week according to wall street experts given the feds conflicting interests where it goes from there is unclear the fed has a tough goal they dont want to break things but they also want to continue fighting inflation says hamilton the waters are muddied and the consensus is all over the place the fed will continue to react to economic data which could mean more hikes a pause or even declining rates in the coming months for investors that likely means one thing volatility as investors look to get a grip on how the fed will act expect asset prices to jump around for longterm investors this isnt necessarily bad news says hamilton for folks starting out early contributions theyre making now are going to make up a significant portion of their total account balance he says if youre buying into a diversified portfolio at regular intervals youre almost ideally set up to benefit from market volatility by buying at lower prices if youre stashing away money for a shortterm goal the good news about rising rates is that you can earn more money on lowrisk instruments such as highyield bank accounts and certificates of deposit if youre saving for a house and youre getting 3 4 or 5 in cash or shortterm bonds thats paying for a good chunk of closing costs with one years interest says hamilton in a choppy economy patience is ultimately key dont get too discouraged dont miss want to be smarter and more successful with your money work  life sign up for our new newsletter get cnbcs free warren buffett guide to investing which distills the billionaires no 1 best piece of advice for regular investors dos and donts and three key investing principles into a clear and simple guidebook check out silicon valley bank is the secondbiggest bank crash in us history—here’s what it means for your money