Staff Reports
The Federal Reserve Chairman, Jerome Powell, recently took the stage at Spelman College and twirled his way through some wishy-washy jibber-jabber about not being totally sure if the economy needs more tightening or not. And let’s be real here – the markets were having none of it. They kept on with their wild speculation, pricing in five or six rate cuts for next year. The final Federal Open Market Committee meeting of the year looked like a sleepy Sunday service, with the Fed keeping its benchmark interest rate steady, just as everyone expected. In the summary of economic projections, the Fed even dropped its forecast for the federal funds rate to 4.6 percent from 5.1 percent, further confirming that they’re leaning towards being as loose as a goose.
Breitbart Business Digest: Jerome Powell Plays Rate Cut Santa Claus https://t.co/6PDm1CSyEq via @BreitbartNews
— John Carney (read Tim’s book: Family Unfriendly) (@carney) December 14, 2023
The forecast change may not seem like a big deal, but it’s like finding out that your mom is buying you five toys for Christmas instead of the one you were expecting. In September, the Fed projected a year-end 2023 fed funds rate of 5.6 percent, hinting at one more rate hike. Well, surprise, surprise, that hike never happened. Now, they’re trotting into the next year with the equivalent of one cut from where they projected just a few months ago. It’s like they’re trying to fill Santa’s shoes with all the rate cuts they’re gifting the economy. The Dow Jones Industrial Average even shot up over 400 points, crossing over 37,000 for the first time, like a rocket ship flying high on all the market optimism.
And the Fed didn’t stop there – they’re also expecting less inflation. They’re projecting a mere 2.4 percent increase in the personal consumption expenditure price index for 2024, barely a nod lower than the previous projection. But hold onto your hats, because they’re really optimistic about this year’s inflation, expecting it to come in at a whooping 2.8 percent, which is a whole half a percentage point lower than what they thought before. It’s like they’re playing Santa Claus but in reverse, taking away all the inflation instead of piling on the presents.
All this means that the market is shouting “hooray!” and setting out the cookies and milk, because they’re convinced that Santa is on his way with a big sack of rate cuts. It’s like Christmas came early for the stock market, with investors acting like kids on a sugar rush, giddy with the idea of the Fed doling out rate cuts like candy canes. It’s a jolly good time for all in the market, with visions of thriving portfolios dancing in their heads. But let’s not forget that what goes up must come down, and this rate-cutting spree might just leave the economy with a sugar hangover in the end.
