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FameEX Hot Topics | Critics Lambaste Powell's Fed Policy, Accuse of Fostering a 'Deceptive Economy' and Eroding Trust Following Rate Decision
2023-12-14 16:16:00
The recent Federal Open Market Committee (FOMC) meeting of the Federal Reserve concluded with no changes to interest rates, aligning with expectations of rate reductions in 2024. Fed Chair Jerome Powell's dovish stance had a positive impact on various financial markets, including stocks, cryptocurrencies, and precious metals.
The FOMC's decision to keep interest rates unchanged was met with a bullish trend in financial benchmarks. Major U.S. stock indices experienced significant growth, reflecting the market's optimism following the meeting. The crypto sector also rallied, with a notable 3.66% increase, with bitcoin (BTC) leading the way with a 4% gain. Traditional safe-haven assets like gold and silver saw notable increases of 2.41% and 4.48%, respectively, indicating widespread confidence in the Fed's decision. In his post-meeting comments, Powell discussed the current economic situation, acknowledging that the economy is not currently in a recession but didn't rule out the possibility of one occurring in the coming year. He emphasized the importance of careful monetary policy, stating, "We are very focused on not making the mistake of keeping rates too high too long." Powell also acknowledged the progress made in core inflation and non-housing services inflation, indicating a cautious and adaptive approach to future monetary policy adjustments. Contrary to some speculations, further rate hikes seem unlikely, as Powell hinted that the current policy rate is likely at or near its peak for this tightening cycle. This aligns with expectations that the Fed may pause rate hikes and consider rate cuts in 2024. The FOMC's statement and Powell's remarks emphasized the Fed's commitment to returning inflation to its 2% target, with evolving strategies. Economist Peter Schiff criticized Powell's stance, suggesting that Powell hasn't genuinely overcome the inflation challenge, and the economy and bull market continue to thrive due to persistent inflation. Sven Henrich of Northman Trader offered his perspective, noting that Powell's shift toward easing financial conditions has undermined the Fed's credibility. Henrich pointed out that the Fed is now claiming a restrictive policy while financial conditions have eased to levels similar to when rate hikes began. Despite Powell's remarks, the CME Fedwatch tool predicts a rate increase at the next FOMC meeting in January, with an 89.7% probability, while 10.3% anticipate no change. The decision to maintain the federal funds rate was influenced by concerns about persistent inflation and the broader economic environment. Powell's dovish approach and hints at potential rate reductions in 2024 have left financial markets uncertain about the future direction of monetary policy. Investors are closely monitoring upcoming FOMC meetings for further clues and adjustments. Disclaimer: The information provided in this section is for informational purposes only, doesn't represent any investment advice or FameEX's official view.
