![]() ![]() However, he doesn’t expect any surprises from the FOMC and is calling for a 25 bps rate hike this week. “Markets have been reacting favorably to moderating inflation and expectations of a reduced pace of Fed tightening, but the lag effects of the Fed’s tightening so far will slow the economy in the second half of 2023 and cause analysts to slash earnings estimates, which ultimately is a headwind for stocks,” said Saperstein. ![]() Richard Saperstein, chief investment officer at Treasury Partners, says the stock market and the economy aren’t out of the woods just yet. The Federal Open Market Committee (FOMC) reduced the pace of its interest rate hikes at its December meeting, and economists are expecting the committee to opt for a 25 basis point (bps) rate hike at the conclusion of its upcoming meeting on February 1. “generally expected little growth in the months ahead.” In its January Beige Book report on economic conditions, the central bank warned that businesses throughout the U.S. Stocks rallied in January despite cautious words from Fed officials on the U.S. The consumer price index (CPI) gained 6.5% year-over year in December, down from a peak reading of 9.1% in June but still well above the Fed’s 2% long-term target. Two key market catalysts that weighed on stock prices throughout 2022 remain front and center in February: inflation and interest rates. The Fed Isn’t Done with Tightening Quite Yet ![]()
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