Summary of FOMC Meeting: Things Have Changed - What It Means!

00:00:00 - 00:20:00

The Federal Reserve recently discussed slowing the pace of interest rate hikes, which has caused markets to rally in anticipation of lower rates. However, it's important to note that slowing the pace of rate hikes is not the same as lowering rates, and that the Fed's outlook for the economy is still quite bearish. There is a possibility that a bearish catalyst could take all assets lower than they currently are.

• 00:00:00 The Federal Reserve published the minutes from its most recent meeting, which revealed that most officials want to slow the pace of interest rate hikes going forward. This news caused markets to rally on the possibility that the FED would pivot away from its tightening policy. However, slowing the pace of rate hikes is not the same thing as lowering rates themselves, and the headlines don't tell the full story. That's why today, I'm going to take a closer look at the Fed's most recent minutes, summarize what they say in simple terms, and tell you exactly what it could mean for the markets in the coming months.
• 00:05:00 The Federal Reserve raised rates by a quarter point, signaling that it plans to slow the pace of rate hikes. The FOMC also discussed the blow up in UK government bonds in September and cautioned that the early warning signs of a similar event are starting to emerge in the U.S. The FOMC also touched on how other currencies are collapsing against the US dollar but didn't have much to say on the matter. The fourth part of the meeting was about financial conditions, with the Fed taking issue with the stock market's recovery and investors' increasing appetite for U.S. government debt. The fifth part of the meeting was about the Fed's economic outlook, which projects that the U.S. economy will be below potential until 2025 and unemployment will simultaneously stay above four percent.
• 00:10:00 The Federal Reserve met on Wednesday and discussed current economic conditions and future projections. The FOMC expects inflation to come back down to two percent as measured by the core PCE in 2025, given that a long recession will last at least two years and recessions tend to reduce inflation. The FOMC also discussed the status of household balance sheets and noted that most of the demand for labor is coming from low-skilled, low-paying jobs that recently fired six-figure salaried software developers. The FOMC projects rents will be one of the last inflation dominoes to fall.
• 00:15:00 The Federal Reserve raised interest rates by 75 basis points and reiterated that they are committed to bringing inflation down to 2% and maintain a slow pace of rate hikes. Jerome Powell testified to politicians that the Fed is committed to keeping rates low for an extended period of time. Some members of the Fed are concerned about non-bank financial institutions and their potential to amplify shocks.
• 00:20:00 The video talks about how the Federal Reserve may slow the pace of rate hikes and pause sometime early next year. This could lead to a recovery in stocks, cryptocurrencies, and other assets. However, there is a possibility that a bearish catalyst could take all assets lower than they currently are.