On May 24, 2022, Bloomberg reported on the comments made by the President of the Federal Reserve Bank of Atlanta, Raphael Bostic. Bostic discussed a Fed pause happening in September. The option is only on the table if inflation retreats, growth slows down, and unemployment rates increase, Bloomberg reports. The media adds that interest rates will increase in June and July by half a point, moving from 1.75% to 2%.
The President of the Fed of Atlanta said that pausing at the September 20-21 meeting might make “sense” if the conditions are met. “The $64,000 question for markets is what market and economic conditions would push the Fed to pause,” UBS strategist Matthew Mish said. Mish added that it will take serious convincing for the pause to happen. Not only will they be looking at inflation but at falling growth as a sign of lower inflationary pressures.
The high yearly annual inflation rates could also force the Fed to look at monthly figures, according to Rishi Mishra, analyst of Futures First. Newsweek reported that the Federal Reserve wants markets to fall. Data Trek, via Business Insider, said that the Fed uses the drop and stock sell-off as a tool to fight inflation. Drop-in stock forces companies to rethink their hiring strategies, which feed wage inflation and consumer spending. “The Fed also knows that the S&P 500 is still 15% above its February 2020 pre-pandemic peak of 3,386,” DataTrek co-founder Nicholas Colas said. While a September Fed pause is a possibility, it is still a long way to go with continued aggressive hikes. Markets in the short play remain volatile, uncertain, and bearish.