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Investors soon agreed following the US Federal Reserve meeting in July that the central bank had taken a slightly more cautious stance.
The Fed has signaled that it may trim the size of future rate hikes after going on an aggressive rate-hike binge this year to fight inflation.
Fed Chair Jerome Powell told reporters, “We preloaded on these very large rate hikes, and now we’re getting closer to where we need to be.”Investors applauded Powell’s alleged turnabout. Financial conditions improved, and the S&P 500 surged, achieving its strongest month since November 2020. For the first time since mid-April, mortgage interest rates decreased below 5%.
Officials from the Fed are now attempting to clarify the situation. They have been discussing a lot once more since they don’t want the markets to turn direction too quickly and undo the results of their prior labor of love.
According to San Francisco Fed President Mary Daly, “[We’re] It’s far from done,” she stated in an interview posted on LinkedIn last week.
It would be “inappropriate… to shout victory too soon,” Federal Reserve Bank of Cleveland CEO Loretta Mester told the Washington Post, risking the encroachment of rising inflation.
We need to see really strong proof that inflation exists.