Results of the Federal Reserve Meeting in September | Wassim Jomaa in an Interview with Al Arabiya

Higher interest rates for a longer period: This was the main headline of the September Fed meeting.

At The Family Office, what caught our attention is that despite inflation data aligning with expectations in July and August, and a slight increase in September, long-term bond yields have remained consistently high since then. This indicates a renewed rise in inflation according to the latest data, along with the economic growth acknowledged by Jerome Powell, the Fed Chairman, in his statement.

The change in the recent Fed meeting is the tightening of the economic outlook. Powell stated that he expects economic growth without an increase in unemployment contrary to previous expectations. Therefore, his expectations for a 1% interest rate cut next year have decreased, and he now expects a 0.5% cut, which also applies to 2025. This directly impacted bond yields, which The Family Office had warned about, as the significant increase in bond yields puts pressure on stock valuations.

The good thing mentioned by Powell in his statement is that the Fed will make its decisions in each meeting based on the available data at that time and will carefully evaluate the data.

In terms of the banking sector, loans haven’t increased since March, while reserves surplus in the US banking system has risen. This means that banks are cautious in lending and prefer to keep their portfolios liquid.

Watch the full interview above.