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Summary of Fed Chair Powell’s March 6 Testimony

Key Takeaways:

  • Fed Is On Track To Cut Rates This Year
  • Inflation Has Eased Notably
  • Fed Needs Greater Confidence On Inflation Before Cutting Rates
  • Fed Rate ‘Is Likely At Its Peak’ For Current Cycle
  • Rate Cuts Will Likely Be Appropriate This Year (2024)

ChartChamp’s Analysis:

  • There is an emerging narrative where the markets are so strong that no rate cuts are needed. These narratives are always inaccurate and dangerous to follow.
  • The markets were too optimistic with anticipation as high as 6-7 rate cuts in 2024. The realistic expectation is 2-3 rate cuts in 2024.
  • It is increasingly difficult for the Fed to reach their 2% inflation target, which was an expected challenge.
  • Smart money is worried about not getting any rate cuts, which could affect economic growth and earnings.
  • The world is facing supply-side challenges and governments are not doing enough to fix these challenges.
  • The Fed pause is bullish, once rate cuts start there tends to be a 20% decline for the stock market on average, but pausing for too long is a concern here as well.

ChartChamp socials: https://linktr.ee/realchartchamp

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