What’s a Fed to Do?

In this buzz: J.P and his FOMC meeting; 25bps expected hike (gasp!) ; and a bit more…

FOMC meeting
Today’s the day we’ve all been waiting for. It’s day two of perhaps the most closely watched FOMC meeting of this cycle and that’s saying something.

What makes this one so special…
…is that it comes in the wake of a little regional bank crisis (in case you hadn’t heard). The expectation is that Jay Powell, or “J-Po” as his friends call him, will hike 25 basis points while trying to reassure everyone that the Fed has everything under control.

It’s a must:
In the immediate aftermath of the collapse of SVB and Signature Bank, there were predictions that the Fed would pause its rate hike campaign in lieu of the crisis and there were even some who (gasp!) though the Fed should cut rates. In the end, the consensus is that beating back inflation is too important to the Fed to stop hiking rates just yet. There is also the not so wacky notion that by not raising rates, the Fed could actually spook the market more than they would with a cute little 25 basis point bump.

How will the markets react to whatever Jer says and does is tbd.
✳ Equities have enjoyed a two-day reprieve and rallied nicely as regional bank stocks recovered.
❓Will the Fed rain on the equity parade? We’ll find out this afternoon.