 | Photo: Axios |
| Looks like we are officially in the "pause and assess" phase of monetary policy. 🏦 | Yesterday's minutes from the January FOMC meeting show that officials largely agreed to keep the benchmark rate steady in the 3.50%–3.75% range after last year's cumulative cuts, but beyond that? The consensus starts to crack. | And from a financial perspective, that division matters more than the decision itself. ⚖️ | At the January meeting, policymakers were debating a surprisingly complicated situation — inflation cooling but still hovering above the Fed's 2% target, a labor market that looks stable (but not booming), and economic growth that remains steady. | In other words, nothing is serious enough yet justify aggressive cuts, but also not hot enough to justify hikes either. 📊 | Financially speaking, this means the Fed is likely to be restrictive, but patient. Several officials hinted that further rate cuts are on the table later in the year, that is… if disinflation continues as expected. | And easing too soon could risk undoing all the progress made so far. 📉 |  | Some participants even noted that rate hikes cannot be completely ruled out if inflation stalls — a subtle sign that borrowing costs may stay elevated longer than investors hoped. | This is important for corporate financing, mortgage rates, and equity valuations, especially right now, with many people complaining that things have gotten a little too expensive for comfort.💰 | Futures traders are now betting on a potential first cut around mid-year, possibly June, with another later in the autumn. But many warn to take all this with a grain of salt, as the minutes make it clear that cuts are conditional, not guaranteed. ⏰ | Another thing to note is that policymakers are also more widely discussing AI involvement in the workforce and markets, with it serving as a potential disinflation fact but also financial risk. In other words, innovation could cool inflation or inflate a bubble. 🤖 | Overall, seems like the central bank is divided, cautious, but definitely paying attention. For investors, that means volatility, delayed easing expectations, and continued focus on economic data.🧾 |
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