Marketbites: Powell Delivers Rate Hike
Portfolio Manager Commentary:
Stocks snapped their two-day win streak yesterday. Major averages hit their lows of the session after Federal Reserve Chairman Jerome Powell signaled more data was needed before the central bank would meaningfully change its view of inflation. The Dow fell as much as 404.47 points, after climbing 287.01 points earlier in the day.
“The inflation data received so far for October and November show a welcome reduction in the monthly pace of price increases. But it will take substantially more evidence to give confidence that inflation is on a sustained downward path,” said Powell.
Chart of the Day:
Fed officials raised interest rates by a widely-expected 50 basis points, as seen below, in hopes that inflation will fall to around 2% in the long run. However, their estimates for inflation in 2023 and 2024 have ticked higher since September. The median projection for core inflation in 2023 rose to 3.5%, up from 3.1%. Officials also expect unemployment next year to rise more than they did in September. The Fed's median projection for the unemployment rate is 4.6% for 2023 now, up from 4.4% in September.