The Fed’s Final Rate Hike, On Wednesday, Federal Reserve Chair Jerome Powell took an aggressive stance at the podium and effectively said that the central bank isn’t done hiking rates.
Topics
Powell’s Pivot
How Investors are dealing with higher volatility
The Fed’s Path to Certainty
A Hard Landing for the US Economy
Powell’s Pivot
This is a stark contrast to what many in the markets have been expecting lately,
that there would be a so-called Fed pivot soon.
It appears this will not be happening anytime soon, as Powell made it clear that he believes further rate hikes
are necessary for continued economic growth and stability.
The Fed’s decision to keep raising rates has sent shockwaves through financial markets,
with stocks falling sharply on Wednesday following his comments.
The reaction from investors was swift; however, many analysts believe these moves
may simply represent short-term volatility rather than long-term shifts in sentiment
or outlooks on monetary policy going forward.
It remains uncertain how far along into 2019 we can expect rate hikes before any sort of pause occurs,
but one thing is certain: if you’re looking for yield right now then you should look elsewhere
because interest rates aren’t likely coming down anytime soon!
Powell’s statement serves as yet another reminder of why it pays off to stay informed
about key economic indicators like inflation levels and employment numbers when making decisions about your investments;
after all, knowledge really is power! So don’t forget to do your research
before jumping into any new investment opportunities,
especially ones involving fixed-income assets like bonds
or CDs which are more sensitive to changes in interest rates than other asset classes such as equities or commodities.
How Investors are dealing with higher volatility
Powell was hawkish up and down the line. In other words,
he wasn’t backing down from his stance on monetary policy despite what the market wanted to hear.
This has caused quite an uproar in markets across the globe as investors are struggling
to make sense of this new reality where central banks aren’t playing by their traditional rules anymore.
Investors were hoping for some sort of pivot from Powell but instead,
they got more hawkishness which has made them wary about investing further
into stocks or bonds due to fears that inflation could be around the corner if interest rates stay too low for too long.
It’s clear that there is no easy answer here – investors can either take their chances with higher volatility or wait out until something changes at The Fed before making any big moves with their money. Either way, it looks like we’re going through some turbulent times ahead as markets try to adjust themselves accordingly while still trying to grapple with these unpredictable policies coming out of Washington DC!
The Fed’s Path to Certainty
The markets seemed to remain relatively flat following Fed Chair Jerome Powell’s speech this week. This could be seen as a sign that investors are set on a particular narrative, and they’re not interested in being swayed by any new information.
For the most part, it appears that the market is comfortable with its current trajectory and has no interest in taking risks or making large moves based on what was said during Powell’s address. The fact that there wasn’t much of an immediate reaction suggests people feel confident about where things are headed for now at least.
This stability is good news for investors who want to avoid volatility when investing their money, but it also indicates something else: certainty from the Federal Reserve regarding future monetary policy decisions and economic outlooks. Wright sees this as positive because it means people have more faith in what will happen next — which can give them peace of mind when making long-term investments or financial plans going forward into 2021 and beyond.
In short, while markets may have remained relatively flat through Powell’s speech, suggesting investor confidence isn’t easily swayed, Wright believes this steadiness should be viewed positively since it implies growing certainty surrounding Fed policies moving forward; ultimately giving everyone involved greater clarity over their own investment strategies.
A Hard Landing for the US Economy
The Federal Reserve has been watching the US economy closely, but it appears their predictions may be off. Even if markets seem to think otherwise, longtime Fed watcher Wright said he believes that a hard landing for the US economy is unavoidable.
This is an alarming thought given how well assets have been performing lately and how this could lead to further economic stimulation. Powell noted yesterday that unemployment most likely needs to increase before we can see any real cooling of our current economic situation – however with markets doing so well, businesses are unlikely to want or need to let go of employees for this decrease in employment rate to happen.
It’s clear then that there’s still much uncertainty surrounding what will actually happen with the US economy going forward and whether or not a hard landing is inevitable despite market optimism at present time – something which no doubt worries many investors out there too! We must hope then that some kind of solution can be found which allows us all to avoid such an outcome as best as possible; only time will tell on this one though.
But the more the market ignores the Fed, the longer the Fed will have to keep monetary policy restrictive, which ultimately raises the odds of a recession.
“Markets are pretty confident that we will get inflation under control, ” Powell said Wednesday, adding that Fed governors aren’t considering an adjustment to the 2% inflation target. “We’re certainly highly confident we can do that.”
