We will hoping to find out through the minutes if there is any discussion between members on how much they want to raise rates in February meeting, but the minutes provide none of that.
FED officials will remain hawkish
"Participants noted that, because monetary policy worked importantly through financial markets, an unwarranted easing in financial conditions, especially if driven by a misperception by the public of the Committee's reaction function, would complicate the Committee's effort to restore price stability"
Above statement indicates the hawkish tone FED members will give during public speaking or interviews in the near term future.
Will keep tightening until significant progress, rate cuts in 2023 is out of question
The FED stressed that they will keep tightening until they see substantial progress on inflation going down and that rate cuts is totally out of the table. This is expected as we continue to see strong job reports and until we see jobless claims increase we can forget about the FED pivoting.
Thoughts
I will take the FED hawkish tone with a pinch of salt, with the last two CPI report showings signs of inflation slowing down I expect the FED to pause rate hike soon if the next two CPI reports continue to show strong improvement.
The above is especially true as they have emphasized on the need for flexibility and will take in the lastest data before deciding the next move
It will be interesting second half of 2023 with a recession likely to be unavoidable the FED might be forced to do a 180 degree turn of their tone like they did back in 2021 December.
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