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What This Fed Watcher Expects From Jerome Powell During FOMC Decision

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Bob Lang explains what he's listening for when Jerome Powell takes the podium later Wednesday.

"Given the volatile stock market thus far in 2022 and the expected but still happening step down in the speed of the global economy in January due to the omicron variant, today's comments from the Fed will be akin to walking an even higher tightrope. The Fed has to convince the market its efforts will tame inflation but without sending the economy into a tailspin as it does so," wrote Chris Versace and Lang, co-portfolio managers of Action Alerts PLUS in their Morning Comments

"Currently, Fed Futures are pricing in four rate hikes in 2022, but given the lag effect with monetary policy we could see Powell once again manage expectations, citing it will remain "data-dependent." Should that happen, market watchers would likely embrace those comments but still keep a close watch on forthcoming inflation data," they continued. "If Powell takes a stricter tone regrading inflation, confirming the market's current rate hike expectation in the process, the year-to-date market volatility will more than likely be with us at least through the current earnings season."

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