The Fed Whisperer Speaks (Quietly, Of Course)
Read our take on November's FOMC and what it means for stocks.
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Introduction
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Now, without further ado, onto the main event.
A Hawkish Surprise - November FOMC Review
by Yimin Xu.
Prior to Wednesday’s FOMC, I highlighted that “patience is needed in the upcoming FOMC” for the Fed pivot, but “members are open to smaller hiking increments”. This was due to a large imbalance between the strong labour market and hot inflation. In my previous notes, I also mentioned that this imbalance could move towards a resolution at end of Q1 next year. More patience is simply needed for now.
When the FOMC statement was released, the new language of taking “into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments” certainly appeared dovish at first. It sounded like the Fed is setting up for a pause in the near future.