In the span of a year, the Federal Reserve has turned, for stock markets, from a harbinger of doom to a beacon of hope.
Of course, the material facts between the two Fed meetings were markedly different. The Fed, as expected, left interest rates unchanged this time, compared with a 75-basis-point hike last year.
But the circumstances surrounding the Fed's decision are different too. Recession fears gripped investors last year. Today, the Fed's upgrading its assessment of the U.S. economy, stating that "economic activity expanded at a strong pace in the third quarter." in the third quarter — are signs of moderating growth. Private payrolls increased less than expected while manufacturing activity in the U.S.
That's not to say Powell dispensed with hawkish rhetoric completely. He still warned that inflation's beyond the 2% mark the Fed is targeting; that the Fed is leaving its decision for December open; that rate cuts are not on the table at all. But when viewed against the events a year ago, it's undeniable much progress has been made on multiple fronts. Even as investors are absorbed in the day-to-day gyrations of the market, it's a reminder that, in the long run, things do pick up.
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