For the stock market it is even clearer than before: the peak of the tightening has not yet been reached.
(Photo: Reuters)
After some back and forth, the US stock market decided to go negative on Wednesday in response to the US Federal Reserve’s (Fed) decision. This was anything but amazing. Not because of the interest rate hike of 0.75 percentage points – that was expected.
But at the press conference, Powell ignored all pressing questions about whether his monetary policy could lead to a recession – and at the same time drastically revised the forecast for the US economy downwards. His main message: inflation is worse than recession. He cautiously hinted that things need not get quite as bad as in previous monetary policy cycles. Otherwise he gave the “hawk”, the strict monetary politician.
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