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The Nasdaq 100 has demonstrated remarkable resilience, maintaining its broader bullish structure despite a more hawkish-than-expected stance from the Federal Reserve. This divergence highlights a significant decoupling of high-growth technology from traditional interest rate sensitivity, driven by AI-led productivity and robust corporate balance sheets.
The Federal Reserve's latest meeting minutes have introduced the prospect of interest rate hikes for the first time in the current cycle, uncovering deep divisions within the committee. Policymakers are increasingly split on whether current monetary policy is restrictive enough to return inflation to the 2% target.
The Federal Reserve's upcoming meeting minutes are expected to detail a critical pivot in how policymakers weigh inflation against employment risks. As interest rates remain at a 22-year high, the internal debate is shifting toward a more symmetric outlook on economic threats.
White House adviser Kevin Hassett has publicly called for "discipline" among Federal Reserve economists following the release of a study highlighting the negative economic impacts of tariffs. This escalation signals a deepening rift between the administration's trade agenda and the central bank's independent analytical framework.
While headline inflation has retreated from its post-pandemic peaks, a 'sticky' core of service costs and the looming impact of new tariffs are complicating the Federal Reserve's path toward its 2% target. Policymakers now face a delicate balancing act as they weigh further interest rate cuts against the risk of reigniting price growth.