Key Points:

• Fed Chair Jerome Powell reveals interest rates may not be slashed in upcoming meeting – Something that could make Wall Street’s bullish investors feel less of a bull and more of an existential cow.
• Policymakers are practicing patience – they want to see more data showing inflation sliding comfortably down to 2 percent like a kid on a well-greased slide at the local playground.
• This stance is not the Federal Reserve’s “base case” scenario but more like a reluctant, skeptical aunty who needs more proof before she lends you her car.

A Wise, Yet Hesitant Fed!

Powell Remains Nonchalant About Rate cut

So, our dear old Fed Chief, Jerome Powell, went up to the mic and casually dropped a bombshell that cut rates aren’t happening so fast. This revelation left investors and traders vying for some smelling salts, as they realized their red hot bull run could be stopped dead in its tracks!

Policymakers Channeling their inner Buddha

As if that shock wasn’t enough, Jerome proudly announced the policymakers’ newfound Zen-like patience. They are waiting for more data to confirm that inflation is gracefully tiptoeing down to the 2 percent target. Their goal is not to rush, but to see inflation smoothly descend like an elegant swan, or maybe just a duck, whatever – the point is, they’re not in a hurry.

Non-committal Modes ON

Adding to their commitment to non-commitment, this patient, data-waiting stance isn’t even their “base case” scenario! It’s just something they’re considering, like that diet you always say you’ll start on Monday but never actually do. They’re acting like your skeptical aunt who needs extra convincing before she lends you her beloved car.

Hot Take

Fed Chair Jerome Powell’s announcement was a bit like when your significant other tells you, “We need to talk.” It’s not what you want to hear and, by golly, it’s not going to be a walk in the park. Wall Street tycoons expecting a rate cut are now looking as perturbed as a hedgehog on a motorway. Meanwhile, the Fed is sitting back, playing hard to get with inflation data. They want to see the numbers prove that inflation is on a genuine (and sustainable) slide back to 2 percent before they even consider a potential rate cut.

Just like in the lead up to a first date, the anticipation and intrigue are what’s driving the current level of excitement (or should we say, panic?). Will the data confirm an intended drop to 2 percent? Or will it stand firm and resist change, throwing Wall Street into an unforeseen tailspin? We wait with bated breath, popcorn in hand, for this financial thriller to unfold!

Original article: https://www.inman.com/2024/01/31/fed-policymakers-want-more-data-dash-hopes-of-march-rate-cut/