![]() ![]() So we haven't made any decisions about the extent to which additional policy firming will be appropriate, but given how far we've come, as I noted we can afford to look at the data and the evolving outlook and make careful assessments.ĭespite heightened uncertainty, due to banking-sector stress, geopolitical instability, and the aftermath of the pandemic, I expect the economy to grow in the second quarter. And our policy is adjusted to reflected that fact. Now until very recently, it's been clear that further policy firming would be required as policy has become more restrictive, the risks of doing too much versus risks of doing too little are becoming more balanced. But we also communicated that the level of rates that would ultimately be required was highly uncertain. ![]() Over this period we communicated that the object was to reach a stance of policy that is sufficiently restrictive to return inflation to 2% over time. And we, in response, we accelerated our policy firming, ultimately as you noted, raising rates by five hundred basis points in just over a year. But then, turned decisively again set expectations thereafter. So I would say, policy certainly has been nimble, consistent with what within our expectations the data did actually show declining inflation through September of 2021. On the other hand, we wanted to be as clear as possible about what we're doing lest we add to uncertainty. On the one hand, we had to be nimble to be able to respond to the evolving situation. So this level of uncertainty posed real challenges for policy and policy communications. So no matter what happened, the outcome was going to be unprecedented. No advanced economy had ever faced a shutdown and reopening, and now, all them would face it at the same time. So it is been a time of historically elevated uncertainty and of unexpected outcomes. If you look back at the pandemic, the global shutdown, the historically forceful response and the reopening all that had no modern precedent. So that statement has never been more apt than it is today. It's worth remembering that he made that comment during what we now think of as the Great Moderation. Allan Greenespan famously said that pervasive uncertainty was the defining characteristic of the policy landscape. For instance, the Fed Chair Jerome Powell spoke at Thomas Laubach Research Conference in May 2023 where he outlined: Luckily for us, several officials of the Federal Reserve have made statements sharing their opinions of what the future holds. So, as the market rises and falls and analysts worry about a potential recession later this year, what does the potential investor do? Well, to determine this, we first need to understand what central bank officials believe the future holds for the economy. Naturally, this cooling down does not bode well for the stock market since it also requires firms to slow down their growth and reduce revenues. As the Federal Reserve's primary policy tool, interest rate hikes are designed to cool down the economy and reduce inflation. Since then, the stock market has risen and fallen - taking its cues from the broader macroeconomic sentiment.Īt the heart of the turmoil, particularly one last year is the rapid increase in interest rates. At the heart of all this roller coaster of a ride is macroeconomic turmoil that refuses to go away ever since the coronavirus pandemic wreaked global havoc. Within a couple of years, stocks that were once thought to be immune to the usual market downturns have dropped by multiple percentage points only to rise again and then drop. Investing these days is a ride not for the faint hearted. For more stocks, head on over to 5 Best Future Stocks for the Long-Term. In this piece, we will take a look at the 13 best future stocks for the long-term. ![]()
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