The Fed didn’t give markets what they wanted, not giving into the panic (and Donald Trump’s Twitter feed) by putting a pause on hikes. More interest rate increases are on the cards, regardless of how bad the stock market is doing (it’s having its worst December since the Great Depression, so that’s pretty bad). Fed chairman Jerome Powell did, however, acknowledge in a press conference today that there have been “some developments that may signal some softening,” citing a global economic slowdown and stock market declines. But he holds relatively firm by saying that these things haven’t “fundamentally altered the outlook.”

There are reasons for the Fed to remain positive. The US just logged its 98th consecutive month of job gains, by far the longest stretch on record, while the unemployment rate held at 3.7%, the lowest in around 50 years, and average hourly earnings rose by 3.1%, matching the highest rate since 2009. But the economies of Italy, Germany, and Japan all contracted in the third quarter, and China’s economy is slowing. A recent survey of fund managers by Bank of America Merrill Lynch found that more than half expect global growth to weaken over the next 12 months—the worst outlook since October 2008. 

HSBC warns that one of the big risks of 2019 is the Fed hiking too many times, especially if it’s preoccupied by accelerating inflation instead of weakening economic growth. For now, the message from the Fed is that we are probably past the peak of the rate-hike cycle, the stock market, and economic growth.

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