Fed Expect
Over the last few days, we have discussed how Markets were anticipating even more rapid rates of interest rate hikes; The Feds aren’t far behind the market here and are contemplating the possibility as well. Indeed, Central bank policymakers are looking at the possibility of raising rates by 75 basis points or three-fourths of a percent. A change in this fund rate changes what banks charge each other for overnight financing. Whether or not the funds rate will actually increase this much is hard to say, however, an actual increase is quite likely.
When looking at the actual polls of what the public thinks, traders seem more or less in agreement about how many basis points The Feds will raise. Indeed, traders are pricing in a 97.9% likelihood of a 75-basis point hike, or three-quarters of a percentage point while the remaining few traders believe the basis point hike will be closer to half a percentage point. Yesterday afternoon these guesses were settled, as Jerome Powell hiked rates by 75 BPS.
In addition to increasing the rate, The Feds will also adjust their outlook for future interest rates, GDP, inflation, and unemployment. Most of these metrics appear on pace to fall short of expectations.
What do you think about the bear market, inflation, and the Fed’s reaction to all of it and will it work?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
