Jay Powell surprised investors yesterday. The market interpreted his comments adversely after the fed raised interest rates again by another 75bp. Instead of pivoting dovish, the fed has turned even more hawkish.
The step came on top of a substantial global tightening trend. There have been about 300 rate hikes across the globe over the past 12 months. That’s unparalleled in the past 25 years.
Critics argue that the frontloading of this hiking cycle went too far. Increased financial stability risk could offset the policy benefits.
The rate hikes have been a headwind for equities and almost all other risky assets this year.
