CBSE - What Will The Fed Do Next?

• The Fed held a special closed-door meeting Monday. I expect that the Fed will say that raising key interest rates amidst rising energy prices due to the Russia/Ukraine situation, plus the economic disruptions from the Canadian trucker blockade, may be unwarranted.
• Christine Lagarde and the ECB cited geopolitical tensions with Russia/Ukraine as one reason that bank decided to leave key interest rates unchanged at 0%, but longer-term interest rates are now rising, so market forces are clearly forcing central bankers’ hands.
• I expect that the ECB and the Fed will merely follow Japan and keep interest rates artificially low relative to inflation. As a result, real estate and stocks should remain an oasis for investors, since they are traditionally great inflation hedges.
• Due to strong U.S. economic growth in Q4, worldwide GDP growth did not stall too much. Unfortunately, according to the Atlanta Fed, U.S. economic growth has slowed dramatically in early 2022, since they are now only estimating 0.7% annual Q1 GDP growth, which is a stunning deceleration from 6.9% annual GDP growth in Q4.

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