Interest rates are the topic of the times including whether they are going to rise, fall or remain the same. Subsequent to the rate hike on December 16, 2015, the S&P 500 has fallen approximately 9.5% including a substantial decline in oil prices (16%). With the Fed's December 2015 predictions of continuing rate hikes during 2016 we were all eager to read the Federal Open Market Committee's ("FOMC") statement on January 27, 2016 regarding the economic outlook. In the end the FOMC downgraded their economic outlook stating that inflation is expected to remain low but maintaining their 2% expectation. In layman's terms: the economy is not as strong as the December predictions once believed, the Fed is hedging its bet and it will continue its policy of reinvesting agency and MBS holdings and rolling over treasury securities to maintain accommodative financial conditions.
For more information or assistance please contact James Dowling, Manager, and member of Marcum's Financial Institutions Industry Group.
See attached articles for more information:
"First Came Fed Rate Hike, Then the Fall: Decision Day Guide" written by Matthew Boesler and Steve Matthews at Bloomberg
"FOMC Policy Statement" by the PCBB