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On the SPOT™ blog (02/01/2023) [A..]

Markets liked what the Federal Reserve Chairman said! There appears to be some cautious optimism coming out of FOMC meeting. Feds raised the interest rate by 0.25%. This was mostly expected. In addition, the chairman mentioned that the process of disinflation had started as they have started to see signs of cooling inflation. The cautionary note was that they would need to see substantially more data to conclude that inflation is on its way to targeted range. I think this is also largely expected as we need data at least until April to establish a level of confidence on where inflation is headed. Given the nature of current geopolitics and macroeconomic environment, it also made sense that Feds estimate having couple of more interest rate hikes this year. They are data driven so they also expect to stop raising rates once the broader economy shows signs of subdued inflation. Based on the current data, Federal Reserve chairman does not expect to hit a severe recession. So, mostly music to investors at least for now. As a response to this, all three major US indices shrugged off all red from earlier in the day to finish in solid green.

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