It Doesn't Matter What The Fed Does Tomorrow

There are three important reasons why you can ignore the Federal Reserve meeting tomorrow.

Reason 1: The Fed only raises rates by a quarter point.

This is not a material move by the Federal Reserve and has already been priced into the financial markets.

Reason 2: The Fed will continue to signal that rates will continue rising through the fall of 2023, but no one believes them.

The Futures Markets are pricing in rate cuts in the 4th quarter of 2023. The bond markets are pricing in rate cuts in the first quarter of 2024.

Reason 3: The Fed's rate hikes to date have not curtailed inflation at all.

The CPI is still at 6.4% and will likely stay at that level for a long time. This is still weit above the Fed's target of 2% inflation.