Green as far as the eye can see! It's a beautiful sight.
- The FED only raised the Federal Funds rate by 0.75 instead of the 1.00 many analysts were expecting.
- Jerome "Papa" Powell flashed a signal that slowing down this phase of tightening is on their radar.
His exact statement was, "As the stance of monetary policy tightens further, it likely will become appropriate to slow the pace of increases while we assess how our cumulative policy adjustments are affecting the economy and inflation."
This was Powell puting up the bat signal saying, look, we cannot keep these rate hikes up at this pace. Sometime in the near to semi-near future, we will have to slow down these increases.
What he didn't say is that not only will they have to slow the rate hikes, they will have to lower the rates again to help "re-build" the economy by injecting cheap money into it.
Markets are no longer reacting to the current state of economic conditions but rather the future expected state based on these comments relayed by the FED.
Expect continued rate hikes in the near future.
September will probably be 0.5 or 0.75 again. But, there will be a time when the economy can no longer absorb these increases and starts to withdraw from a lock of cheap money like a drug addict needing its next hit.
When that time comes, I fully expect the FED to be waiting there, syringe in hand.