“... If equities continue to rally on bad economic news, the Fed will need to push forward to an even higher terminal rate and unofficially add ‘weaker stocks’ to the mandate,” wrote Ian Lyngen and Benjamin Jeffery, rates strategist at BMO Capital Markets.
A line from the minutes of the central bank’s December policy meeting released Wednesday afternoon was taken by analysts and economists as a warning to financial market participants that bets on a policy pivot in 2023 aren’t welcome. And, to the extent that equity rallies and other financial market developments loosen overall financial conditions, those wagers will only force the Fed’s policy-setting Federal Open Market Committee to prolong the pain necessary to bring down inflation.
Archive: Fed must ‘inflict more losses’ on stock-market investors to tame inflation, says former central banker The minutes made clear that the “proverbial Fed put is officially dead and gone,” said Kent Engelke, chief economic strategist at Capitol Securities Management, in a Thursday note.
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