• The Federal Reserve will determine its next policy decision regarding interest rates on February 1st.
• Current expectations are for a +0.25% rate hike, with the market assigning a near 100% certainty of this outcome.
• Jerome Powell recently said the Fed is not at a sufficiently restrictive policy stance yet and that ongoing hikes would be appropriate.
The FOMC Meeting
The Federal Reserve will make their next policy decision regarding interest rates on February 1st, with current expectations being an increase of +0.25%. The market assigns a near 100% certainty of this outcome, setting the policy rate to 4.5%-4.75%.
Powell’s Recent Comments
Jerome Powell recently stated that the Fed is not at a sufficiently restrictive policy stance yet and that ongoing hikes would be appropriate in order to bring inflation down to 2 percent while avoiding financial conditions that affect economic activity, labor markets, and inflation. He stressed that the focus must remain on persistent moves rather than short-term ones.
Reaction To Inflation
Global risk assets have been rallying to start the year as market participants expect inflationary scares from 2022 to abate in 2023 and beyond, leading to lower interest rates which would then be bullish for risk-assets in general. However, it is important to keep in mind the frivolous nature of transitory inflation when making long-term decisions about investments or other financial matters.
Implications Of The Decision
The implications of the Federal Reserve’s decision can range from minor changes in stock prices due to shifts in investor sentiment or major shifts across global markets due to changes in monetary policies around the world such as quantitative easing or fiscal stimulus packages if needed. Therefore, it is important for investors and traders alike to pay close attention when these decisions are made so they can adjust accordingly and take advantage any potential opportunities or risks associated with them.
In conclusion, this article covers how the market expects the Fed’s upcoming decision on February 1st regarding interest rates and what readers should watch out for regarding changes in expected paths and possible second-order effects of those changes. It is important for investors and traders alike to pay attention so they can adjust accordingly during such times of uncertainty and volatility as global markets react accordingly depending on how these decisions play out over time