Wall Street grows in hopes of the Fed’s policy easing

Softer U.S. economic data, as well as less significant than expected increase of interest rates in Australia, stimulated a rapid growth of the S&P 500 index and gave hope for less aggressive monetary police tightening by the U.S. Federal Reserve (Fed).

Although demand for labor is still quite high, the number of available job vacancies in the U.S. decreased substantially in August. This fact demonstrates that the Fed’s goal to control inflation by increasing interest rates was aimed at slowing down the economy.

Chief market strategist at Ameriprise Financial, Anthony Saglimbene, noted that the Reserve Bank of Australia (RBA) was the first major central bank which recognized the need of slowing down rate hikes after their aggressive growth this year. Saglimbene also expressed his hope for the Fed’s recognition of this need in the last quarter of 2022 as well. To clarify, it’s not about stopping rate hikes, but slowing the pace.

However, the Fed Governor, Philip Jefferson, declared that inflation is the most important problem for the U.S. central bank so far, and the solution will take some time. Mary Daly as the San Francisco Fed President added to this statement that the central bank needs to continue hiking rates.