Market Extra: Stock-market investors are convinced the Fed is finished with rate hikes. Why it isn’t a done deal.

by | Nov 16, 2023 | Stock Market

It’s all over. A subdued October consumer-price index reading this week ensures the Federal Reserve is done raising interest rates and the next move will be a cut. Well, maybe. The Federal Reserve would prefer to wait and see, but there’s “definitely a scenario” in which another rate hike could happen, said Matt Stucky, chief portfolio strategist at Northwestern Mutual Wealth Management Company.

That scenario includes “an acceleration from here in terms of consumer spending or a reversal of improvement in inflation,” he said in a phone interview. Investors may not fully appreciate the Fed’s resolve to get inflation down, he said, while Fed officials don’t want to allow the possibility of continued resilience in the labor market — and continued resilience of the consumer as a result of that strong labor market — to derail the effort. That said, after bringing the fed-funds rate from zero to its current range of 5% to 5.25% in short order starting with hikes in March 2022, the Fed will be willing to wait, Stucky said, but emphasized that policy makers still see “job number one” to be restoring price stability. As for the accelerated stock-mar …

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