The Fed’s Disinflationary Policies and Market Reactions: A Look at What’s Ahead

As the Federal Reserve continues to raise interest rates in an effort to cool the economy, the public is becoming increasingly weary of their efforts. Despite the central bank's attempts to maintain stable prices, prices are still rising at a rate well above their 2% target. This has eroded some of the public's trust in the Fed's ability to deliver. JPMorgan Chase CEO Jamie Dimon expressed his doubt in the Fed's ability to control inflation in a recent interview with CNBC.[0]

Analysts will be looking to the January Personal Consumption Expenditures report, due to be published on Friday, for any sign that the Fed's disinflationary policies are working.[1] If the data comes in higher than expected, it could lead to a larger rate hike of a half percentage point in March.[1]

An increasing amount of market movements have become disconnected from the Fed's messaging, and Blackrock analysts wrote in a note Thursday that inflation will likely remain above policy targets in the coming years. Lisa Shalett, chief investment officer for Morgan Stanley Wealth Management, raised questions about whether inflation progress is stalling and if the Fed will need to “tread carefully.”[0]

The real estate slump is also taking its toll on big banks.[1] Wells Fargo confirmed to CNN that they have had layoffs across their home lending business in response to a decrease in mortgage volume.[1] They have provided severance, career assistance, and other services to impacted employees.[1]

Domino's stock also dipped nearly 12% on Thursday after the pizza maker admitted they were having some delivery issues.[1] CEO Russell Weiner said that customers are not willing to pay the delivery fees due to high inflation, and that deliveries at stores open at least a year fell 6.6% compared to the same period last year. Papa John’s reported soft sales in the fourth quarter, and their stock closed about 6.1% lower.[1]

Fortunately, data from Fidelity Investments, one of the largest providers of workplace retirement plans, shows that retirement savers understand the importance of saving for the long-term, despite market shifts.[1] People are encouraged to look past the current volatility and continue to make smart choices for their future.[1]

0. “Morning context: Why today's report on inflation could make or break the US economy” WRAL TechWire, 24 Feb. 2023,

1. “Why today's inflation report is so important -” KTEN, 22 Feb. 2023,

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