November’s dovish ‘Dr. Jekyll’ FOMC statement was met with Fed Chair Powell’s ‘Mr. Hyde’ hawkish hammering which leaves everyone wondering – after today’s hawkish FOMC statement, will Powell punish the pessimists this time?
We suspect he certainly is not happy that despite 225bps of rate-hikes, financial conditions remain ‘easy’ – not exactly the ‘choking’ he had hoped for…
Investors are wondering if Powell delivers Jackson Hole (SPX -3.4%) or more like Brookings/Nov 30 (SPX +3.1%).
It may be the case that Powell focuses on the length of time Fed Funds will remain elevated rather than pace or level.
One wonders if Powell will be uber-hawkish in an effort to ‘break’ something which will then give him an opportunity to ‘pause’ his inflation-fighting policies without embarrassing himself and removing the last leg of credibility and independence that the central bank has.
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