Remaining Tactically Cautious

Sep 21, 2023 • 7 Min Read

Rates Surge on Higher for Longer

As expected, Fed Chair Powell took to the podium yesterday and kept interest rates unchanged. Concurrently, he unveiled the Fed’s new dot plot, which forecasts one more rate hike for this year but two fewer cuts for the next year. This was perceived as more hawkish than anticipated by both traditional and crypto markets.

The video in this report is only accessible to members

The dot plot and Powell's rhetoric collectively signal a 'higher for longer' monetary stance. However, a closer look at the Fed's economic projections reveals that the Federal Reserve Board anticipates a relatively soft landing. They forecast higher GDP, lower unemployment, and kept PCE inflation at 2.5%.

The video in this report is only accessible to members

The apparent discrepancy between Powell's comments and the Federal Reserve's projections could be the reason why the Fed fund futures market has yet to fully price in an additional rate hike for this year. Additionally, the market is still projecting a year-end rate that is 25 basis points below what the dot plot suggests.

The video in this report is only accessible to members
Whether or not the Federal Reserve's forward-looking statements are to be trusted, the market reaction to the press conference was decidedly negative. Asset prices declined, a trend that persisted into today, a...

Unlock this page with a FREE 30-Day Trial!

*Free trial available only on a monthly plan

Reports you haven't read

Get invaluable analysis of the market and stocks. Cancel at any time. Start Free Trial

Articles Read 1/1

🎁 Unlock 1 extra article by joining our Community!

You’ve reached your limit of 1 free monthly articles. Please enter your email to unlock 1 more articles.

Already have an account? Sign In