‘Flation Update

In this buzz: 50 basis point hike; Fed rate highest in 15 years; fight against inflation; “no reduction” in rates until 2024 ; risk of recession and more financial news…

Equities sold off after the Fed announced a much anticipated 50 basis point hike in the Fed Funds rate to its highest level in 15 years. In line with expectations, the FOMC voted to boost the rate a half a percent, targeting a 4.25% to 4.5% range. The Fed broke a string of four consecutive 75 basis point hikes which was the most aggressive it has been since the 80s.

The Fed wants to make sure everyone understands that despite recent signs of tamer inflation, which have helped spur a rally in risk assets, that the Fed is not taking its eye off the prize in its fight against inflation. In fact, the Fed’s indication that it may go higher for longer is likely the reason stocks sold off following the release of the FOMC statement. The Fed indicated that they expect “no reduction” in rates until 2024. There are concerns however that the Fed is continuing to raise rates, not in the face of inflation, but in the face of a struggling economy and risking throwing the U.S. economy right into a recession.

Stay tuned.