This is an AI translated post.
It's Time to Pay Attention to the Fed's Stance
- Writing language: Korean
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Base country: All countries
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- Economy
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Summarized by durumis AI
- The US Federal Reserve's misjudgment on inflation has thrown financial markets into turmoil, and the likelihood of the US benchmark interest rate rising to 3.5% by the end of 2024 has increased.
- The Fed is expected to raise interest rates to curb inflation, and the possibility of a cold wave in asset markets has increased.
- In the current situation, investors need to focus on securing cash liquidity to prepare for the upcoming cold wave in asset markets.
The financial market has fallen into chaos in the face of the highest inflation rate in 41 years.
The root of this inflation-induced crisis lies in the FED's misjudgment of the market situation.
Last month, on the 31st (local time), Secretary Yellen shocked the White House. She admitted in a CNN interview that she "misjudged the inflationary path." The Biden administration has been diligently explaining the surge in consumer prices as "temporary."
This statement caused Yellen to diverge from the Biden administration's inner circle.
The misjudgment of Yellen, the economic head of the Biden administration and the one who was confident about inflation
The misjudgment of Jerome Powell who said that there would be no rate hikes until 2024 and that the Fed wasn't even considering inflation
It is clear that the FED didn't anticipate such a strong inflation rate.
In fact, inflation had been kept under control simply by signaling a rate hike.
However, the situation has completely reversed in just six months. With inflation reaching its highest level in 41 years, market expectations of no rate hikes this year have shifted to an acceptance of a 3.5% US benchmark interest rate by the end of the year.
In light of the current situation, caused by the FED's misjudgment, what should we do?
While we don't want to believe it, we have to listen to the FED again.
Because they have the right to print the dollar, which is the benchmark for the price of all goods worldwide!
In March 2020, during the midst of the bleak COVID-19 period
the fed introduced an unprecedented strategy called unlimited quantitative easing.
In the week following this announcement, on March 24, 2020, the S&P 500 index bottomed out and soared skyward like a rocket, experiencing an unstoppable rise. A large number of "foreign stock ants" were created.
The FED has made up its mind.
With a firm belief that asset prices will rise, they have rolled up their sleeves and set out to tame inflation.
The fed is very determined to tame inflation.
As a cold wave will begin in the asset market,
we need to step up our efforts to secure cash liquidity and prepare for the coming cold snap.
Winter is Coming
