The Fed’s Decision Puts the Tone for the US Stock Market in 2023

United States – The Federal Reserve or Fed’s Federal Open Market Committee (FOMC) holds a meeting on December 13 to 14 to talk about the decision about the rate hike that will start on December 14. Aside from that, the Fed will release the latest projections for GDP growth.

The inflation in the United States or the US appears to be cooling down. The CPI data from yesterday’s report displayed that yearly inflation slowed down to 7.1% last month, which is lower than the October rate of 7.7%. The US stock market investors will strongly watch the Fed’s rate hike decision today. The chief of the Fed draws more attention in the post-conference, which will send signals to the market.

The Fed will announce the decision on a rate hike on December 14 after conducting a meeting on December 13 to 14. Aside from the decision about the rate hike, the Fed will also share the previous projections for GDP growth, consumer prices, and the labor market.

The FOMC will not decide the significance of the rate hike this month. It will also show projections, which was the highlight of the meeting. Jerome Powell, the Fed Chairman, will organize a press conference, which analysts, investors, and economists will keenly watch.

The US stock market is anticipating a 50bps rate increase, which is a shift away from the 75bps rate hike, which is in four consecutive instances. The Fed increased rates by 375bps with consecutive rate hikes. The Federal funds rate will hit 4.25% after the 50bps rate hike.

The Fed’s chair shared that a message to the market has been vague and the Fed may think of slowing the speed of the hikes. However, the terminal state funds rate might be higher than the expectations of the market.

The rate hikes of the Fed this year impacted the economy a little. The mortgage rates rose, which reduced pressure on housing. However, the labor market stays strong. Incomes are rising but consumers continue to spend. The growth rate of the US GDP augmented in the past quarter.

Powell explained that the impact of rate increases can be witnessed with a time lag while the US stock market will be on a waiting game. Slowing down the speed of rate increases will slow down the US economy as well, yet it will help in preventing a harsh recession.

On another note, stocks increased after the inflation data of the US. The Dow Jones Industrial Average increased 0.3% or 103.6 points to 34,108.64 while the S&P 500 increased 0.73% to 4,019.65.

Binary Options Zone Copyright © 2019