The unpredictable nature of the stock market

27/07/22 ~ Federal Reserve Meeting

Jerome Powell, the chairman of the Federal Reserve has rounded up the key points from today's meeting, as seen below:

- Interest rates were increased by 0.75%, which was in line with the majority of expectations (ranging from 0.75%-1.25%), but a 0.75% increase was the most likely one.

- Powell said that inflation is expected to ease in correlation with demand, and steeper hikes may no longer be needed; however, a September increase is still likely depending on the inflation rate.

- The purpose of increasing the rates is to reduce the rate of demand until supply catches up so that inflation will subsequently go down.

- Powell, just like Biden does, believes that the economy is not in a recession, which contradicts the data we can see in the markets today.

- Powell expects the tight unemployment rates to loosen a bit as the growth slows down due to contractionary monetary policy via hikes.

Despite all of these indicators pointing towards economic downfall, investors reacted well with the general feeling being that the storm has passed in June.