This week could be a watershed moment for stock market investors. US CPI data release is scheduled for December 13 while the FOMC meeting takes place on December 13-14. The Fed rate hike decision and the economic projections are to be announced on December 14.

On December 13, 2022, the Bureau of Labor Statistics will release the November 2022 CPI data at 8:30 A.M. Eastern Time. The next day, on Wednesday, the FOMC will make its most recent policy announcement and reveal revised economic predictions. Later, Fed Chair Jerome Powell will hold a news conference starting at 2:30 PM ET.

US markets may be preparing to close on a positive note, provided the November inflation shows further cooling. In October, annual inflation was at 7.7% having fallen from 8.2% in the previous month. A lower reading of core-inflation figures could be a sentiment booster for the markets.

Further, the Fed is expected to deliver a 50bps rate hike on December 14, a move away from the 75bps rate hikes seen consecutively four times in 2022. The post-conference commentary from Fed Chief Powell will also be closely watched by global investors.

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In a speech last month at the Hutchins Center on Fiscal and Monetary Policy, Fed Chair Powell hinted that a pause in interest rate hikes may be on the horizon. He did this by highlighting the monetary policy’s laggard effects. However, wage inflation brought on by a persistently robust job market continues to be a challenge for Fed officials. Powell’s message to the market has been clear – Pivot can wait for now as the terminal federal funds rate can be higher than expected earlier, however, the pace of rate hikes will slow down.

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The job market has not reacted in the way the Fed would have liked. The US GDP growth rate also showed momentum in the previous quarter. The real impact of rate hikes, in Powell’s own words, can be seen with a time lag and the stock market will play the waiting game for now. Meanwhile, S&P 500 and Dow 30 have already retracted their recent gains and any upside could be seen only when the macro indicators look supportive.