As I reflect on this year, and the events that have transpired in it, particularly the FOMC’s recent meeting which shocked the markets and surprised the hawkish. It felt as if we had seen five different Feds in the last year.
The Fed was shocked by the unexpectedly high inflation figures in the first quarter of 2024. The Fed reversed their previous dovish tendencies that they set in 2023. In June, FOMC shocked the market by releasing a dot plot with an inclination to cut rates in 2024.
An alarming jobs report from August changed the whole narrative. Fed became worried that the growth was slowing and they were losing their labor market. This led them to flip dovish and cut rates by 50bps in September. Now that we’ve had over 100bps cut, the Fed has flipped to hawkish. Forecasts for only two rate cuts in 2025 are uncertain.
If that all sounded like a rollercoaster of confusion, trust your instinct — it was.
As we enter the New Year, and with February off, it’s time to expect another flip-flop. I also see that the cost of 2025 could be increased by more than expected.
As we enter the New Year, here are my final thoughts. Expect to hear the sound of flip-flops continuing in the distance.
Have a great holiday and we’ll see you next year!
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