Will the Federal Reserve Pivot in 2023?

  • Investors are wondering if the Federal Reverse will pivot in 2023.
  • That might happen as it seeks to protect the economy.
  • However, there might be negative effects it can’t stop from happening.
Will the Federal Reserve Pivot - Will the Federal Reserve Pivot in 2023?

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There’s a lot of talk about the Federal Reverse right now as investors wonder if it will pivot in 2023.

All throughout 2022, the Fed has been moving forward with plans to combat inflation. That includes increasing interest rates and quantitative tightening. However, that’s continued to put stress on the economy and some think the agency won’t change its tune next year.

While rising interest rates were supposed to stop inflation from increasing, it hasn’t worked yet. Case in point, is the 8.3% inflation level consumers are currently experiencing. That’s a far cry from the 2% inflation that the Federal Reverse is aiming for.

What Do the Experts Think Will Happen?

Mike Wilson, a Morgan Stanley analyst, believes that a Fed pivot is likely, but that it won’t solve all of the economy’s problems. Here’s what he said in a note obtained by Markets Insider:

Bottom line, in the absence of a Fed pivot, stocks are likely headed lower. Conversely, a Fed pivot, or the anticipation of one, can lead to a sharp rally especially because we are so oversold… Just keep in mind that the light at the end of the tunnel you might see if that happens is actually the freight train of the oncoming earnings recession that the Fed cannot stop at this point.

No matter the case, investors will want to keep a close eye on the Federal Reverse whether it pivots or not.

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On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.


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