#markets #Fed #fedmeetingresults
Yesterday, the Fed, as expected, raised the rate by 0.5%. This was positively received by the markets and stocks and cryptocurrencies continued their upward movement, while the dollar continued to decline.
But then everything unfolded after Mr. Powell’s press conference. Let’s figure out what scared the market.
Purchases based on expectations and upon the release of positive inflation data were based on the forecast of an imminent reversal of the Fed.
Firstly, yesterday the forecasts for the rate for 23 and 24 years were revised upwards.
Secondly, Powell made it clear that the rate will be raised again in the 23rd year and in September of the 23rd year the rate will not be lowered.
Well, the main thing, apparently, is the concern about the overheating of the labor market. Even the goals were announced – 4.7% unemployment (at the current 3.7%).
As Powell said, the Fed’s decisions will be made based on incoming data (which, in general, is obvious). In fact, the Fed does not notice the beginning of the cycle of decreasing inflation just as it did not notice the beginning of the cycle of its growth.
Therefore, investors have concerns that the Fed may be late again and cause serious damage to the economy by keeping the rate at a high level for a long period. So the fun continues. As before, the focus next year will be on data related to the labor market and inflation.
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