Jerome Powell would be terrible to have in your book club. He would always reveal how the book would end.
When the Fed Chair spoke following the Fed meeting in February, he said, “we’re in the early stages of deflation” and revealed that the Fed was on track to bump rates another 25 basis points at its March meeting.
But in the following weeks, the markets got unsettled after hotter-than-expected consumer and producer prices rose. Investors started to think that Powell may be misreading the economy and he might arrive at a new conclusion.
The table shows that 72 percent of traders expect the Fed to increase rates by 25 basis points in March. They also see another bump in May but are less confident the further you look. So the “smart money” still believes Powell’s plan.
One thing is certain, Jerome Powell can’t keep a secret. If he’s had a change of heart about rates, he will inform the markets as soon as possible. Markets hate surprises, especially when it comes to monetary policy. Powell knows that better than anybody.
I'll let you know if anything changes in my outlook as soon as possible. Until then, I always look for recommendations to add to my reading list!
The market indexes discussed are unmanaged and generally considered representative of their respective markets. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.
Fed Chair Powell Can't Keep a Secret
April 14, 2023