February came right off the bat with the Fed’s decision to raise the policy rate by 25bps to 4.625%, the midpoint between 4.50% and 4.75%. It was unanimously expected, but it sparked pressing concerns that the January rally could be over and done with. Many pundits believe that investors are playing a game of chicken with the Fed. Chairman Powell continued to insist that he is serious about holding inflation in check, reiterating that neither he nor his colleagues have any intention of lowering, let alone pausing, interest rates anytime soon, even if it means overall trouble for the economy and markets. By and large, the monetary authorithies seem reluctant to abandon aspirations of a 5% terminal rate. The question is, will it happen? Perhaps they\u2019re bluffing. Powell admitted that the disinflationary process had started and that progress was encouraging.<\/p>\n
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