In the year 2024, monetary policy is predicted to have a significant impact on the stock market, with the American Federal Reserve Bank being a key determinant. Since the start of the Covid pandemic, central banks have been navigating through uncharted waters, with many unsure of how things would unfold in the future. The decisions made by central banks, particularly the Fed, are closely watched by professional investors, with many expecting the Fed to play a crucial role in shaping stock prices in the coming year.
According to a survey conducted by Bank of America, 52 percent of investment fund managers believe that the Fed will have the greatest impact on stock prices in 2024, as opposed to only 33 percent who feel that company profits will be the main driver of prices. John Plassard, an investment specialist at Bank Mirabaud, also sees wrong monetary policy decisions as being the biggest risk for financial markets.
The Fed’s handling of inflation has been a point of contention, with initial assessments of inflation being deemed “temporary” leading to subsequent interest rate hikes. However, due to lack of reliable data post-Covid and uncertainty around inflation rates, central bankers are finding it challenging to make informed decisions. Despite this uncertainty in markets being further exacerbated by rising inflation rates – recently reaching 2.7 percent in March – for now, interest rates remain steady according to Fed Chairman Jerome Powell’s cautious approach towards monetary policy decisions.
Looking ahead to 2024 and beyond national elections taking place in over 40 countries with combined population over 3 billion people could significantly affect market dynamics and geopolitical events may add more uncertainty into this already volatile environment. However despite these uncertainties and risks investors are advised not to be too risk-averse especially considering American stocks expected performance well under current conditions.