No New Surprises

September 21, 2022 03:15 PM By

Fed Funds rate now at 3.00%

Today's move by the Federal Reserve is no surprise. In fact, it is largely a stated continuation of its recent moves. The only surprise is a slightly higher target for the "terminal rate", which is the peak rate before they would start cutting (not that cuts would occur immediately). The median terminal rate is 4.60% sometime in mid-2023. It wouldn't surprise me to see that go slightly higher if inflation doesn't slow down further; 4.60% is only essentially 2 more increases of 75 basis points.

Jerome Powell is being extremely clear. There will be some pain; there is no easy solution to this. I believe the likelihood of a "soft landing" is much less than what I think many believe it is. Be patient, manage your risk, and focus on fundamentals. Govern yourself accordingly.

One of my recent commentaries goes a little more in depth on this topic.  Click here for more details.  Registration is required.

#federalreserve #FOMC #economy #jeromepowell