Fed PAUSES! Fed PAUSES!
A: The fed ended a 2+ year interest rate hike campaign today with a PAUSE and leaving the fed funds rate at 5.25%. However, they issued a statement saying, "some inflation risks remain and continued tightening may be needed"!
The decision was NOT unanimous (9-1) as one voting member of the fed wanted to bump up rates another 25%! Also, the statment was a bit on the dovish side as the fed stated that inflation expectations are for a moderation in inflation as past fed moves kick in and the economy continues to cool.
NOTE: A pause does NOT mean the fed is done completely! Yes, if the economy continues to slow, inflation will seem to dissipate, and the fed may have to cut rates to stimulate the economy again. But the timing of such rate cuts are probably further down the road than people think! For the short term, another future rate hike is much more certain as future inflation #'s will reflect the lagging effects of very high energy and commodities prices!
Plan accordingly and expect the last 3-4 fed rate hikes to still trickle through the economic system and affect all of us over the course of the next 8-10 months!