Jitters in Front of the Fed

The Federal Reserve concludes its two-day meeting on Wednesday.

The Fed pivoted from its sanguine path in December and has continued to telegraph a more forceful approach in the new year. Notably, volatility has increased.

What might be on tap?

Few expect a rate increase this week, but the Fed will probably signal a hike in March. Might this be the first of three, four, are more increases this year? Investors are cautiously eyeing a more aggressive Federal Reserve, which seems intent on tackling inflation.

Then, there is its balance sheet. The Fed, which has been buying bonds, could let maturing assets runoff later in the year.

Bottom line

Fed Chief Powell will be peppered with questions at his Wednesday press conference regarding interest rates, the Fed’s balance sheet, and how aggressive the Fed may be this year.

One possible approach: everything is data dependent, but Powell may not come out ‘guns blazing.’

While he may leave the door open to a more aggressive response, he may not commit to it and highlight that the future path of monetary policy will depend on the economic data.

Ultimately, investors must control what they can control. We can’t control the stock market. We know the long-term path has historically been higher, but volatility is inevitable.

What can we control? We can control the financial plan. It is the roadmap to our financial goals.