Today is the FED Testimony: Continued Pivot or Rate Hike by the FED?

Today is the FED testimony where Jerome Powell, will most likely, discuss the foregoing board opinion of how to be approaching inflation from now on. The board has, so far, looked split upon whether to be favoring a 25 or 50 point increase. 

Both approaches will not lead to the most economically ideal results as they are both destructive to a certain point. 

But what can the FED do about it? 

The FED can either fight inflation or let people suffer under a rampant CPI. 

The 25 point increase does not only mean that inflation will be coming down at a considerably slower rate than would under a 50 point increase but also that the US economy would remain in similar conditions than it would have since the end of 2021 for a longer time. 

On the other hand, a 50 point increase would make the 2% inflation target that the FED has imposed more likely to be achieved, but will also lead to a higher risk of a recession.

Reasons the FED might hike by 25 points:

1) The FED has a bigger room for error in terms of inflation than it does for a recession. In other words,

inflation has fallen from an ATH of 9.2% to a current 6.4%,

while causing a recession would look really bad for the FED.

2) The FED might blame a rising CPI on geopolitical events, meaning that they might start considering core CPI as the

measure and use a softer approach to justify their moves.

3) The FED will be more motivated to keep high interest rates for a longer time rather than risking a higher rate, considering

that investor sentiment in the stock market might remain high despite inflation.

Nonethesless, I personally believe the FED will favor a 50 point increase

Reasons the FED might hike by 50 points:
1) One year is left before the 2024 elections as the FED tries to convince critics that the Democrats have done a good job of managing the inflation, trying to have Democrats re elected.
2) A 25-point-increase would not bring inflation down to the 2% FED target fast enough, if to the target at all. 

Nonetheless, I think that the stock market will continue to go up as investors have already considered the fight against inflation a battle they have won.The uptrend will probably continue until investor sentiment starts pricing in that inflation is not coming down as the FED has

issues fighting it.
For example, a scenario where equity prices would be negatively impacted is if energy and food prices were to increase again due to geopolitical tensions.

Unfortunately, crude oil seems to have been increasing lately.

That is just my opinion.