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I reflect on this year and what happened, especially with regard to the recent FOMC meeting that caught the hawks and the hawks by surprise. The markets were shocked. Over the course of one year, it feels like we've gone through five different versions of the Fed.
In the winter of 2024, the Fed was spooked by a sudden spike in inflation in the first quarter. This prompted them to reverse the dovish sentiment they had established in the fall of 2023. Then, in June, the FOMC surprised the market with a decision Hawks point plot This means hardly any cuts in 2024.
Then, a regarding The August jobs report turned the entire narrative on its head. The Fed became concerned about the fear of growth and labor market losses, and turned again to dovish policy, peaking in September. Cut off 50 bps To start the cycle of interest rate cuts. We have now had 100 basis point cuts and the Fed has taken a hawkish stance again. The outlook for 2025 is uncertain, with only two reductions expected next year.
If all of this sounds like a whirlpool of confusion, trust your gut — it was.
Now, with January expected to be off and no meeting in February, I once again expect another volatility as we head into the new year. Additionally, I see the potential for further cuts than currently expected in 2025 during the first quarter.
So, as we head into the new year, I offer you my parting thoughts: Expect to continue hearing flip flop noises in the distance.
Enjoy the holidays and see you in 2025!
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