Latest / Markets with Megan: A Quick Financial Markets Update / 048: A Close Look at the Federal Reserve's Unexpected Monetary Shifts

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048: A Close Look at the Federal Reserve's Unexpected Monetary Shifts · Markets with Megan: A Quick Financial Markets Update

• 0:04
  Megan Horneman: Hello, this is Megan Horneman, the Chief Investment Verdence Capital Advisors, coming to you today with our regular segment of Markets with Megan talking about the FOMC meeting.
• 0:13
  Megan Horneman: So the Federal Reserve met this week and they, as expected, kept interest rates unchanged.
• 0:19
  Megan Horneman: However, their tone and then their future projections for interest rates were a bit surprising to the market and a little bit more hawkish than the market had anticipated.
• 0:29
  Megan Horneman: If you've listened to any of our other podcasts, we've been warning about this that the Fed couldn't take their foot off the gas, because inflation is very easy to reignite.
• 0:40
  Megan Horneman: The concern right now is that energy prices are going to cause a lot of volatility in inflation data going forward.
• 0:46
  Megan Horneman: So let's just dig in a little bit to the numbers.
• 0:48
  Megan Horneman: What they saw was an increase in their expectation for GDP this year and next year.
• 0:55
  Megan Horneman: However, next year is only supposed to be about 1.5% for the full year the inflation numbers.
• 1:01
  Megan Horneman: We're waiting for them to get to their target rate.
• 1:04
  Megan Horneman: They're not expected to reach their target rate until 2026.
• 1:08
  Megan Horneman: Now we don't think it's going to take that long before they cut rates, but inflation is still going to be elevated this year and still above their target rate next year.
• 1:17
  Megan Horneman: The other thing that surprised the market was that the expectation for the Fed funds rate for next year.
• 1:23
  Megan Horneman: They were originally anticipated at 4.6%, which meant several interest rate cuts next year.
• 1:29
  Megan Horneman: Now the expectation is for 5.1%.
• 1:32
  Megan Horneman: So the main story here is interest rates are higher for longer the Fed may not be done.
• 1:37
  Megan Horneman: There may be another rate hike this year before they then stay on pause for a long period of time.
• 1:44
  Megan Horneman: That's all we have today.
• 1:46
  Megan Horneman: If you have any questions, please feel free to reach out to podcast verdence.
• 1:48
  Megan Horneman: com.