From Fortune:

Following the latest FOMC meeting, the markets appear to have underestimated Fed Chairman Jerome Powell’s hawkish stance. Despite some speculation about rate cuts, the tightening labor market and rising inflation indicate a possible delay in interest rate cuts until later in the year. The 12-member FOMC may also see more internal disagreements this year, potentially delaying any cuts.

Economic data points to a strong economy, with inflation, jobless claims, and wage growth rising. Retail sales also remain strong. Publicly, Fed Chairman Jerome Powell continues to prioritize the 2% inflation target. The new committee, including three incoming members, may lead to a more hawkish stance in 2024, further delaying potential rate cuts this year.

Sticky core inflation has exceeded the Central Bank’s target. In December, there was a notable rise in both overall and core inflation, partly driven by high wage growth and strong consumer spending. Yet, Chairman Powell stands firm on his stringent inflation target of 2%, signaling that the FOMC may take a cautious stance on interest rates unless there’s a clearer macroeconomic background.

Market sentiment regarding a potential interest rate cut in March has shifted dramatically in recent months. Despite speculation that the Fed will reduce rates, the strong economy and high inflation likely indicate a delay in potential cuts, given Chairman Powell’s insistence on the 2% inflation target. New committee members could further cement a more hawkish stance, potentially delaying any rate cuts this year.

Following the Q1 Federal Open Market Committee (FOMC) meeting, there’s been speculation about a potential shift towards rate cuts. However, price inflation, wage growth, and strong retail sales seem to indicate a delay in any potential rate cuts. FOMC members may also face more internal disagreements this year, further delaying any policy changes.



Read more: The markets are starting to realize just how hawkish the Fed is–and reckoning with higher-for-longer interest rates