Something about Chris Tucker and Ice Cube shocked at the FEDs monetary decisions just makes me giggle..
The FED believed inflation had peaked back in April at 8.3% but when May came in at 8.6%, they decided that a 0.5% raise wouldn't cut it and bumped it up to 0.75%.
The market was made aware a few days before the announcement of the potential change so by the time it became official, the markets had already priced in the increase.
We're two days past and it appears that prices are moving sideways.. For now.
I believe we are still facing some potential downside especially as the FED tries to put out this inflation with a dollar general water gun.
The next numbers I'm watching are the June CPI (consumer price index) figures.
If they come in higher than 8.6%, expect an immediate drop across ALL markets.
Anything 8.6% and just below will still likely drop markets as that will indicate the FED is "achieving" their goal of containing inflation and will likely keep their next rate hike around 0.5%.
Anything below 7% is where it would start to get interesting.
I could see the FED dropping the hike down to 0.25% which would relieve some market pressures but could also slow down the lowering of inflation.
After the announcement, Jerome was quoted saying..
“I do not expect moves of this size to be common,” said Fed Chair Jerome Powell at a post-meeting press conference, referring to the 0.75 percentage point move. “Either a 50 basis points or 75 basis points increase seems most likely at our next meeting.”
The current Federal Funds Rate is sitting around 1.75% and they are trying to hit 3.5% by the end 2022.
This would be double from where we are today in less than 6 months.