Traders are indicating that the Federal Open Market Committee of the Federal Reserve will likely pause in interest rate hikes at their upcoming meeting, which coincides with a potential new bull market. Last week, the Dow Jones Industrial Average and NASDAQ Composite experienced positive trends, with major indices surpassing their moving averages. Despite excitement over a new bull market, caution should still be exercised as a longer-lasting shift by the Fed in its monetary policy is not guaranteed. According to former Federal Reserve vice chair Roger Ferguson, even if a pause is announced, more rate hikes are possible later in the year due to ongoing concerns about inflation. This is supported by the May consumer price index report, to be released on the first day of the FOMC meeting, and recent cooling in the labor market. However, labor market data is not always a reliable indicator of recession. Nonetheless, high levels of inflation may force the Fed to take action that could lead to a recession.
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