Federal Reserve Chairman Jerome Powell should have started the November Federal Reserve meeting press conference with one of the more widely used movie quotes, "there's a storm coming." Chairman Powell's comments after the Fed meeting were certainly the most hawkish we have heard from him.

First, the Federal Reserve Board unanimously voted for the 0.75% rate hike. That alone is a sign that all members of the Fed believe we still need to slow the economy to fight inflation.

During the press conference, Powell took this perhaps another step further when he was asked a question and responded that inflation hasn't been coming down as fast as the Fed had hoped.

Powell's answer about inflation not coming down as his team expected came after he indicated the likelihood of a soft landing was diminishing. Powell mentioned that November's 0.75% hike, the fourth hike of that amount in four consecutive meetings, was "fast pace," however, he also insisted that it was "appropriate" given our current situation, referring to high inflation.

Powell also stated the Fed has some ways to go with future rate hikes. He continued, "We may move to higher levels than we thought."

Another concerning statement came when Powell said, "the question of when to moderate the pace of increases is now much less important than the question of how high to raise rates and how long to keep monetary policy restrictive."

I had written in the past that I felt the Fed Chairman was "sugar coating" the inflation situation to help stabilize the economy and the market's reactions to his comments.

However, Jerome Powell's comments on November 2, 2022, were the first time he did not come across as soft or sugar-coating about what is happening with inflation and the economy. In several ways, the Federal Reserve Chairman is telling the world that inflation is enemy number one and that what the Fed has done up to this point is not working.

So, what does this all mean for the average investor? Continue reading "Powell Starting to Change His Tune" →