Last night, the Federal Reserve announced the December rate hike resolution. For example, the market expected a 50 basis point rate hike. However, Powell's remarks shocked the market again. Powell suggested that the end point of the rate hike might be higher, and that interest rate cuts were not considered until inflation fell to 2%. This meant that the market's expectations that interest rate cuts could be resumed in early 2023 fell through, and the high interest rate level remained at least until the end of 2023.
US stocks took a big dive after Powell's speech, and are still plummeting tonight. Combined with the high opening and low temptations after the CPI was announced the day before, US stocks have been falling sharply for three consecutive days. $Dow Jones Industrial Average (.DJI.US)$ It fell below the upward trend, while $Nasdaq Composite Index (.IXIC.US)$ It fell below the moving average support of all daily levels. America is slowly embarking on a slow path again.
Many people are puzzled, hasn't the Federal Reserve already moderated the rate hike? Why are US stocks continuing to fall? In fact, it's a very complicated situation right now. Since the release of water in 2020, the US monetary policy has been exhausted. The Federal Reserve has no second option other than tightening, and the timing and process of tightening is very dangerous. A little carelessness can cause a major recession. However, the Federal Reserve is worthy of being a master of expectation management. Using every interest rate meeting to carefully manage market expectations, it was actually able to complete this tightrope walking performance.
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