A busy January ends with a Fed decision high on expectations, despite zero chance of any actual move on rates. The central bank is likely to hold its benchmark rate steady at a 22-year high of 5.25 percent to 5.5 percent for the fourth straight meeting. Here’s what you need to know:
#1 The Economic Backdrop:
The Fed’s first meeting of 2024 comes at a time of economic expansion. It may be backwards looking, but 3.3 percent GDP growth in the fourth quarter has us asking yet again: what recession? Then there’s inflation, we know it’s finally heading back down toward that much sought after 2 percent level. Sounds like the perfect recipe for cuts - but is it?
#2 March is the Word:
Investors have put the second meeting of 2024 on the table for the first rate cut, but will the Fed nod in that direction? The Cleveland Fed’s Loretta Mester says that’s "probably" too early. Fed Governor Christopher Waller seems to agree, this month effectively saying ‘fools rush in’ - and cuts should be implemented ‘methodically and carefully.’ Then there’s Austan Goolsbee of the Chicago Fed; he needs to see more data…
#3 The Balance Sheet:
It may not be the most exciting part of the Fed’s activities, but it does have potentially serious implications for investors. At the start of the pandemic the Fed started boosting its balance sheet - in part through buying lots of treasuries. That’s known as Quantitative Easing. The reversal of that process - known as QT or quantitative tightening started in 2022. Now the future of that policy is increasingly becoming a talking point for investors. We’ll be across all the action in a critical meeting for the Fed right here on Yahoo Finance. Don’t miss it.
Video Transcript
- A busy January ends with a Fed decision high on expectations despite zero chance of any actual move on rates. The central bank is likely to hold its benchmark rate steady at a 22-year high of 5.25% to 5.5% for the fourth straight meeting. Here's what you need to know.
Number one, the economic backdrop. The Fed's first meeting of 2024 comes at a time of economic expansion and may be backwards-looking, but 3.3% GDP growth in the fourth quarter has us asking yet again, what recession? Then there's inflation. We know it's finally heading back down toward that much sought after 2% level. Sounds like the perfect recipe for cuts, but is it?
Number two, March is the word. Investors have put the second meaning of 2024 on the table for the first rate cut. But will the Fed nod in that direction? The Cleveland Fed's Loretta Mester says that's probably too early. Fed Governor Christopher Waller seems to agree, this month, effectively saying, fools rush in and cuts should be implemented methodically and carefully. Then there's Austan Goolsbee of the Chicago Fed. He needs to see more data.
Number three, the balance sheet. It may not be the most exciting part of the Fed's activities, but it does have potentially serious implications for investors. At the start of the pandemic, the Fed started boosting its balance sheet in part through buying lots of treasuries. That's known as quantitative easing. The reversal of that process, known as QT, or Quantitative Tightening, started in 2022. Now the future of that policy is increasingly becoming a talking point for investors.
We'll be across all the action and the critical meeting for the Fed right here on Yahoo Finance. Don't miss it.
What To Watch: Federal Reserve Meeting - Yahoo Finance
Read More
No comments:
Post a Comment