Latest / Markets with Megan: A Quick Financial Markets Update / 3.1% Inflation. 0% Action From the Fed | S3 E175 | 10-28-26

Transcript

3.1% Inflation. 0% Action From the Fed | S3 E175 | 10-28-26 · Markets with Megan: A Quick Financial Markets Update

• 0:00
  Megan Horneman: The Fed came out today and delivered a pretty boring results from their meeting, but also pretty frustrating as well.
• 0:07
  Megan Horneman: It's Wednesday, October the 28th, and this is Markets with Megan.
• 0:10
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• 0:25
  Megan Horneman: Well, today we got the much anticipated Federal Reserve meeting.
• 0:29
  Megan Horneman: As expected, markets were expecting the Fed to stay unchanged, so not make any changes to interest rate policy.
• 0:36
  Megan Horneman: They did not.
• 1:07
  Megan Horneman: They said that the monetary policy was tighter, but not necessarily tight.
• 1:12
  Megan Horneman: That insinuates there may be more rate hikes to come.
• 1:15
  Megan Horneman: They did say that what they have been seeing is that the actions that they did in September, where what they removed a dose of accommodation, was actually starting to show tightening in financial conditions.
• 1:29
  Megan Horneman: Now, um they they released a couple more comments basically all around the fact that they're gonna wait and see, but they did continue to reiterate that inflation is their number one goal, that they would deliver price stability.
• 1:41
  Megan Horneman: They said no ifs, ands, or buts.
• 1:44
  Megan Horneman: However, um they just didn't seem as concerned about where we are with an inflation with inflation than than we are.
• 1:52
  Megan Horneman: Um inflation is not going lower, it's actually getting worse.
• 1:55
  Megan Horneman: And regardless of whether or not they decided to keep rates unchanged at this meeting, I was expecting a bit more of a hawkish tone from the Federal Reserve Chairman.
• 2:04
  Megan Horneman: Now he did, um we know that he came into office and he was going to make some changes to the the monetary committee, the amount of meetings.
• 2:12
  Megan Horneman: Starting in 2027, they'll still have eight meetings, but they will only vote seven times.
• 2:19
  Megan Horneman: One of the meetings will be just a meeting about broad monetary policy strategy.
• 2:24
  Megan Horneman: And they expect in 2028 there'll actually be two meetings that they focus on focus on strategy and will not have a vote.
• 2:31
  Megan Horneman: Um what we saw from the market was with that um with that uh announcement is there with fewer Fed meetings, we did see short-term interest rates come lower.
• 2:39
  Megan Horneman: Um they might have also come lower because he wasn't as aggressive enough on what we're dealing with with inflation than we had anticipated.
• 2:47
  Megan Horneman: Now, the we tomorrow we will get the PCE indicator.
• 2:51
  Megan Horneman: This is the Fed's preferred inflation indicator.
• 2:54
  Megan Horneman: Um, we will right now the expectations is for that to rise at the core level 3.1% versus 3% last month.
• 3:01
  Megan Horneman: So again, we're nowhere near where this Fed wants to be.
• 3:05
  Megan Horneman: Um and it doesn't look like we're gonna get there anytime soon.
• 3:08
  Megan Horneman: And he came out to talk about stronger economic the stronger economy, but inflation keeps going the other way.
• 3:14
  Megan Horneman: And I think it's a it's a mistake for to think that he should be or for for him to come off with such not a dovish, but not as hawkish as I would have liked to see.
• 3:24
  Megan Horneman: Um we think December is a definite.
• 3:26
  Megan Horneman: They will need to raise interest rates.
• 3:28
  Megan Horneman: If inflation keeps getting worsening between now and that December meeting, we would not hold all, we would not um put 50 basis points on the table.
• 3:37
  Megan Horneman: He came in to this to this position uh a hawk.
• 3:40
  Megan Horneman: Um he was very strong about that in the beginning.
• 3:43
  Megan Horneman: This is a meeting I didn't get that hawkish tone, but hopefully he'll he'll come back with that in future meetings.
• 3:48
  Megan Horneman: Um, let's be clear, he also is not in favor of giving future guidance.
• 3:52
  Megan Horneman: So he did not.
• 3:53
  Megan Horneman: This wasn't a meeting that we were going to get any economic projections anyway.
• 3:57
  Megan Horneman: Um, but I don't expect to get a lot of information out of him in between these meetings.
• 4:02
  Megan Horneman: So we're back to the drawing board looking at economic data and watching this inflation just continue to go away from the Fed's target and hoping the Fed will eventually do something about this.
• 4:12
  Megan Horneman: That's all we have today.
• 4:13
  Megan Horneman: We'll be back tomorrow to discuss that inflation indicator that we will get as well.
• 4:17
  Megan Horneman: If you want a history of our podcast, you go to marketswithmegan.fm.
• 4:20
  Megan Horneman: Thank you.