Key US stock market indices, such as the DOW Jones, the NASDAQ and the S&P 500 declined again on Monday. It was not as strong as on Thursday or Friday, but nevertheless. Notably, yesterday morning it became known that the Fed was calling an emergency meeting. A statement was published on the website of the US regulator. Although it said that no key rate hike will be discussed, the market is now clearly in suspense because the Fed rarely calls an emergency meeting. The reason must therefore also be very important. So, what reason could there be right now except rising inflation? If the Fed is indeed going to meet on this particular occasion, then it will be a key rate hike that will be discussed. The rate will either be raised now or in March, but more sharply than previously planned. Most experts now agree that the rate could be raised immediately by 0.5% in March. The not so popular opinion is a 0.25% rate hike. The market believes that this is too small a change given the current inflation rate of 7.5%. Well, the US stock market continues to be under pressure because, as mentioned many times, any tightening of monetary policy is a negative factor for it.
However, as of the morning of February 16, no data had yet been received from the Fed. This means that the meeting is not yet over and there are no results. Most likely, they will come out during the day today. Since the Fed is on the path of monetary policy tightening, it is unlikely to be announced today that no rate hike will take place yet. The outcome of the meeting will almost in any case be hawkish. This means that already today the US dollar could get support from currency traders and investors could start to get rid of risky assets like stocks and cryptocurrencies.
Monday also saw speeches by Fed representatives James Bullard and Esther George. Bullard said it was time for the Fed to move to raise rates as planned, as confidence in the regulator was at stake. Esther George said the regulator should consider starting a sell-off of the $9 trillion worth of securities piled up in its accounts. Actually, these statements are not important for the market, as they have been announced many times before. The market has already taken them into account and is waiting for action.