Source: CNN —
The stock market has been on a roller coaster ride, largely because of Wall Street’s shifting expectations about whether the Federal Reserve is going to slow down the pace and size of its interest rate hikes.
The Fed briefly excited investors last week when it acknowledged in its policy statement it would consider the lag effects of all its rate hikes on the economy before considering what to do next. But Fed Chair Jerome Powell dashed those hopes during his press conference when he talked about how the Fed is still extremely worried about inflation.
Here’s the thing, though: Investors are paying way too much attention to what Powell and other Fed members are saying about the economy and not focusing enough on numbers that show how the economy is actually doing.
The Fed is still data dependent, meaning it will set policy based on the performance of the job market, inflation, consumer spending and a host of other factors.
Powell spoke last Wednesday, two days before the latest jobs report showed that the US labor market is still pretty healthy. So those new numbers have to be taken into consideration when determining the rate hike calculus.
“The Fed is continuing to learn and adapt. But it is very data driven. They don’t know how high they are going to have to raise interest rates,” said Mark Hamilton, chief investment officer of Hirtle Callaghan.