FED minutes: no rate cuts until 2024

US indexes registered gain yesterday

Wednesday has been a positive day for Wall Street.

All the US major indexes have closed in profit.

The S&P 500 at +0.75%, the Nasdaq at +0.69% and the Dow Jones closed at +0.40%.

Fed's goals have changed

The US stock market reached its all-time high one year ago, on this day.

The Federal Reserve's monetary policy has changed from low inflation and super easy money to high inflation and tightening policy.

Policymakers have changed their focus in a short period of time, in fact, the Fed initially was acting in favour of economic growth and then changed completely its goals to fighting inflation and attacking the stability of the financial market.

December meeting minutes

Yesterday, the minutes from the Fed’s latest meeting in December have been released.

The Federal Reserve's inflation target is 2% and in order to reach this goal there is in place one of the most aggressive tightening campaigns in the Fed’s history.

The meeting minutes have shown that the policymakers have no intention to stop their interest rate hikes until there will be clear evidence of an inflation reduction.

In December there was an interest rate hike of 0.5% instead of the previous four consecutive hikes of 0.75%.

The reduction of the hikes has been followed by the fact that inflation appeared to have peaked.

The "dot plot" released has not shown a rate cut until 2024 and many officials are expecting a federal fund rate peaking between 5% and 5.25%.

At the moment we do not know if in the next Fed meeting the interest rate hike will be 50 basis points or 25 basis points.

Big Tech companies are cutting jobs

Amazon (NASDAQ:AMZN) is planning to cut over 18,000 of its staff.

Salesforce said it would eliminate 10% of its 80,000 workforces.

Meta in November announced to cut 11,000 jobs.

The reasons behind the job cut are high inflation, high logistics costs and slowing customers demand.

Sentiment Indicator - Fear & Greed Index

The market sentiment is at 41 in the "Fear" mode which is higher than yesterday.

FedWatch Tool - FED rates probabilities

63.2% of investors are expecting the FED to increase the interest rates by 0.25% at the next meeting.

The remaining 36.8% are expecting a 0.50% rate increase.

The number of investors expecting a rate increase of 0.50% is getting higher compared to yesterday.

No other options are considered at this time.

The next FED meeting is on 1 February 2023.

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