AFMC - The Market Is Not Ready For What The Fed May Be Preparing To Unleash

2024-04-29 13:51:00 ET

Summary

• The Fed must push back against easing financial conditions to get the disinflation trend back on track.
• The Fed needs to indicate that the number of rate cuts in 2024 will be less than previously projected.
• Market expectations show that inflation is not expected to return to the 2% target anytime soon, and monetary policy is not as restrictive as it should be.

The FOMC meeting in May may prove to be a pivot point yet again for a Fed that has struggled to find its way over the last few months and, for a time, appeared to lose control of the market and its battle against inflation. However, with three hot CPI prints in a row to start 2024 and a fourth hot print expected to be on the way for April, the Fed now finds itself in a position where it finally must push against the easing of financial conditions in an attempt to get the disinflation trend back in place....

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