“Absent those two or some combination, take the Fed at its word. “The only way the Fed pivots to rate cuts-not just pauses-is either we get more significant deterioration in the economy, or the banking system travails turn into much more of a systemic crisis,” she said. Liz Ann Sonders, Schwab’s chief investment strategist, said that given all this, investors probably shouldn’t be looking for rate cuts in the immediate term. Getting inflation down to the Fed’s target “has a long way to go … It will take time, and if forecast is right, it wouldn’t be appropriate to cut rates.” Inflation “has moderated somewhat since the middle of last year but remains high,” Powell told reporters after the FOMC meeting. With Wednesday’s increase, the Fed’s benchmark is now at a range of 5% to 5.25%. stocks initially appeared to take the Federal Reserve’s announcement of an expected quarter-point interest rate increase in stride Wednesday, but then tumbled later in the session after Fed Chair Jerome Powell effectively poured cold water on suggestions the central bank may become less aggressive on inflation any time soon.Īlthough a post-meeting statement from the Fed’s Federal Open Market Committee (FOMC) was interpreted as a sign the Fed may be near a much-anticipated “pause” in its tightening cycle, Powell indicated in a press conference that rate cuts are unlikely any time soon given that inflation is still running above the central bank’s 2% target rate.
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