{"id":1453,"date":"2023-02-26T08:02:24","date_gmt":"2023-02-26T13:02:24","guid":{"rendered":"https:\/\/embarrdowns.com\/feds-hawkishness-is-no-match-for-flourishing-economy\/"},"modified":"2023-02-26T08:02:24","modified_gmt":"2023-02-26T13:02:24","slug":"feds-hawkishness-is-no-match-for-flourishing-economy","status":"publish","type":"post","link":"https:\/\/embarrdowns.com\/feds-hawkishness-is-no-match-for-flourishing-economy\/","title":{"rendered":"Fed’s Hawkishness is No Match for Flourishing Economy"},"content":{"rendered":"

The past year has seen the Federal Reserve (Fed) raise its benchmark interest rate from near zero to a range of 4.5% to 4.75%. Following strong economic data, Wall Street firms and policymakers at the Fed have voiced concerns about inflation, which is still well above its long-term target of 2%. As a result, the Fed is continuing to tighten its monetary policy, including reducing its balance sheet each month by about $100 billion and raising interest rates.[0]<\/a><\/sup><\/p>\n

Stock pickers who navigated the 2022 bear market have been struggling with the 2023 faltering recovery, as the reassessment of how high the Fed will raise interest rates has rocked the bond market.[1]<\/a><\/sup> Accompanying these revisions are expectations for the Fed to raise interest rates by 25bps in March with the Fed funds rate expected to peak around 5.3% by the summer.<\/p>\n

Retail sales in January jumped 3.0% to a record $697 billion, beating expectations of a 2.0% increase.[0]<\/a><\/sup> Consumer and producer prices were also higher than expected. Despite the decline in inflation, the labor market remains strong with the unemployment rate at 3.4%, so the Fed is unlikely to change its target amid the current hiking cycle.[2]<\/a><\/sup><\/p>\n

The stock market has been completely flipped upside down so far in 2023 as risky assets that struggled last year stage a big comeback, despite continued rate hikes from the Federal Reserve.[3]<\/a><\/sup> Minutes from the Fed\u2019s February meeting revealed that members believe “ongoing” interest rate increases are necessary.[4]<\/a><\/sup> <\/p>\n

Hence, it may be wiser to take heed of more recent remarks by Federal Reserve authorities, including Loretta Mester and James Bullard, who are both in favor of a 0.5% rise.[5]<\/a><\/sup> Bullard believes that the U.S. economy can stay afloat despite the disruption resulting from increased interest rates.[4]<\/a><\/sup> Despite the Fed’s hawkishness, indications point to the possibility of no rate increase; this should give investors peace of mind.[4]<\/a><\/sup> CNBC Daily Open: The economy might be fine with inflation higher than 2%.[6]<\/a><\/sup><\/p>\n

0. <\/span>“Economic forecasts are getting revised up, and people aren’t thrilled about it” Yahoo News, 19 Feb. 2023, https:\/\/news.yahoo.com\/economic-forecasts-are-getting-revised-up-and-people-arent-thrilled-about-it-135118589.html<\/a><\/a><\/p>\n

1. <\/span>“A One-Way Market Foils Stock Pickers as Fed Trounces Everything” BNN Bloomberg, 25 Feb. 2023, https:\/\/www.bnnbloomberg.ca\/a-one-way-market-foils-stock-pickers-as-fed-trounces-everything-1.1888217<\/a><\/a><\/p>\n

2. <\/span>“CNBC Daily Open: The Fed wants inflation at 2%. But the economy may be fine with higher inflation” CNBC, 20 Feb. 2023, https:\/\/www.cnbc.com\/2023\/02\/21\/stock-markets-the-economy-might-be-fine-with-inflation-higher-than-2percent.html<\/a><\/a><\/p>\n

3. <\/span>“The stock market is flipped upside down as traders defy Fed, chase risk” Markets Insider, 18 Feb. 2023, https:\/\/markets.businessinsider.com\/news\/stocks\/stock-market-trends-flipped-upside-down-investors-defy-fed-2023-2<\/a><\/a><\/p>\n

4. <\/span>“CNBC Daily Open: Markets fall as the Fed shows no sign of pivoting away from interest rate hikes” CNBC, 22 Feb. 2023, https:\/\/www.cnbc.com\/2023\/02\/23\/stock-markets-the-fed-shows-no-sign-of-pivoting-away-from-rate-hikes.html<\/a><\/a><\/p>\n

5. <\/span>“CNBC Daily Open: Markets Fall as the Fed Shows No Sign of Pausing Interest Rate Hikes” NBC 10 Philadelphia, 23 Feb. 2023, https:\/\/www.nbcphiladelphia.com\/news\/local\/cnbc-daily-open-markets-fall-as-the-fed-shows-no-sign-of-pausing-interest-rate-hikes\/3506936\/<\/a><\/a><\/p>\n

6. <\/span>“CNBC Daily Open: Markets Fall as the Fed Shows No Sign of Pivoting Away From Interest Rate Hikes” NBC 5 Dallas-Fort Worth, 22 Feb. 2023, https:\/\/www.nbcdfw.com\/news\/business\/money-report\/cnbc-daily-open-markets-fall-as-the-fed-shows-no-sign-of-pivoting-away-from-interest-rate-hikes\/3200496\/<\/a><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

The past year has seen the Federal Reserve (Fed) raise its benchmark interest rate from near zero to a range of 4.5% to 4.75%. Following strong economic data, Wall Street firms and policymakers at the Fed have voiced concerns about inflation, which is still well above its long-term target of 2%. As a result, the Fed is continuing to tighten its monetary policy, including reducing its balance sheet each month by about $100 billion and raising interest rates.[0]<\/a><\/sup><\/p>\n

Stock pickers who navigated the 2022 bear market have been struggling with the 2023 faltering recovery, as the reassessment of how high the Fed will raise interest rates has rocked the bond market.[1]<\/a><\/sup> Accompanying these revisions are expectations for the Fed to raise interest rates by 25bps in March with the Fed funds rate expected to peak around 5.3% by the summer.<\/p>\n

Retail sales in January jumped 3.0% to a record $697 billion, beating expectations of a 2.0% increase.[0]<\/a><\/sup> Consumer and producer prices were also higher than expected. Despite the decline in inflation, the labor market remains strong with the unemployment rate at 3.4%, so the Fed is unlikely to change its target amid the current hiking cycle.[2]<\/a><\/sup><\/p>\n

The stock market has been completely flipped upside down so far in 2023 as risky assets that struggled last year stage a big comeback, despite continued rate hikes from the Federal Reserve.[3]<\/a><\/sup> Minutes from the Fed\u2019s February meeting revealed that members believe “ongoing” interest rate increases are necessary.[4]<\/a><\/sup> <\/p>\n

Hence, it may be wiser to take heed of more recent remarks by Federal Reserve authorities, including Loretta Mester and James Bullard, who are both in favor of a 0.5% rise.[5]<\/a><\/sup> Bullard believes that the U.S. economy can stay afloat despite the disruption resulting from increased interest rates.[4]<\/a><\/sup> Despite the Fed’s hawkishness, indications point to the possibility of no rate increase; this should give investors peace of mind.[4]<\/a><\/sup> CNBC Daily Open: The economy might be fine with inflation higher than 2%.[6]<\/a><\/sup><\/p>\n

0. <\/span>“Economic forecasts are getting revised up, and people aren’t thrilled about it” Yahoo News, 19 Feb. 2023, https:\/\/news.yahoo.com\/economic-forecasts-are-getting-revised-up-and-people-arent-thrilled-about-it-135118589.html<\/a><\/a><\/p>\n

1. <\/span>“A One-Way Market Foils Stock Pickers as Fed Trounces Everything” BNN Bloomberg, 25 Feb. 2023, https:\/\/www.bnnbloomberg.ca\/a-one-way-market-foils-stock-pickers-as-fed-trounces-everything-1.1888217<\/a><\/a><\/p>\n

2. <\/span>“CNBC Daily Open: The Fed wants inflation at 2%. But the economy may be fine with higher inflation” CNBC, 20 Feb. 2023, https:\/\/www.cnbc.com\/2023\/02\/21\/stock-markets-the-economy-might-be-fine-with-inflation-higher-than-2percent.html<\/a><\/a><\/p>\n

3. <\/span>“The stock market is flipped upside down as traders defy Fed, chase risk” Markets Insider, 18 Feb. 2023, https:\/\/markets.businessinsider.com\/news\/stocks\/stock-market-trends-flipped-upside-down-investors-defy-fed-2023-2<\/a><\/a><\/p>\n

4. <\/span>“CNBC Daily Open: Markets fall as the Fed shows no sign of pivoting away from interest rate hikes” CNBC, 22 Feb. 2023, https:\/\/www.cnbc.com\/2023\/02\/23\/stock-markets-the-fed-shows-no-sign-of-pivoting-away-from-rate-hikes.html<\/a><\/a><\/p>\n

5. <\/span>“CNBC Daily Open: Markets Fall as the Fed Shows No Sign of Pausing Interest Rate Hikes” NBC 10 Philadelphia, 23 Feb. 2023, https:\/\/www.nbcphiladelphia.com\/news\/local\/cnbc-daily-open-markets-fall-as-the-fed-shows-no-sign-of-pausing-interest-rate-hikes\/3506936\/<\/a><\/a><\/p>\n

6. <\/span>“CNBC Daily Open: Markets Fall as the Fed Shows No Sign of Pivoting Away From Interest Rate Hikes” NBC 5 Dallas-Fort Worth, 22 Feb. 2023, https:\/\/www.nbcdfw.com\/news\/business\/money-report\/cnbc-daily-open-markets-fall-as-the-fed-shows-no-sign-of-pivoting-away-from-interest-rate-hikes\/3200496\/<\/a><\/a><\/p>\n","protected":false},"author":3,"featured_media":1452,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[47],"tags":[],"_links":{"self":[{"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/posts\/1453"}],"collection":[{"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/comments?post=1453"}],"version-history":[{"count":0,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/posts\/1453\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/media\/1452"}],"wp:attachment":[{"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/media?parent=1453"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/categories?post=1453"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/tags?post=1453"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}