The Federal Reserve’s price stability campaign advanced at its Wednesday meeting via a hike in the federal funds policy rate by 75 basis points to a range between 2.25 and 2.5%. The central bank stuck to its pace of balance sheet reduction. At this critical juncture, with the policy rate residing in ... READ MORE >
FOMC
FOMC policy decision preview: Fed to hike lending rate .75% next week
A 100-basis-point increase in the federal funds rate will be on the table during the Federal Open Market Committee meeting next week, but we expect the central bank will hike the policy rate by 75 basis points. The fourth boost to the lending rate this year will come amid clear signs of global and ... READ MORE >
FOMC decision: Policy, price stability and balance sheet strategy
Price stability is a precondition of maximum sustainable employment, sustainable growth at the long-term rate of 1.8% and financial stability. The Federal Open Market Committee's decision on Wednesday to increase the federal funds rate by a half-percentage point to a range between 0.75% and 1% in ... READ MORE >
FOMC preview: Powell caught in the crossfire
Next Wednesday’s meeting of the Federal Open Market Committee will result in the central bank hiking its policy rate by 25 basis points to a range of between 0.25% and 0.5%. And with risks linked to the war in Ukraine exploding, we do not expect the Federal Reserve to outline its tentative plans to ... READ MORE >
Fed slows asset purchases as it moves to end pandemic-era accommodation
The Federal Reserve announced on Wednesday that later this month it would start paring back its pandemic-era monetary accommodation even as it held its policy rate between zero and 25 basis points. This policy step, announced after the two-day meeting of the Federal Open Market Committee, creates ... READ MORE >
FOMC preview: Tapering explained
Next week’s meeting of the Federal Open Market Committee will focus on the Federal Reserve’s exit from its pandemic-era asset purchase program that has sent its balance sheet above $8.5 trillion. We expect that the Fed will announce plans to reduce its monthly monetary accommodation of $140 billion ... READ MORE >
FOMC preview: Expect more talk, less action at the July meeting
Inflationary risk and the delta variant of the coronavirus will be front and center at next week’s meeting of the Federal Open Market Committee, while policy changes will take a back seat. The primary takeaways of the meeting, should there actually be anything other than a reaffirmation of the status ... READ MORE >
CHART OF THE DAY: Yield spread flattens as inflation trade unwinds
The Federal Open Market Committee unleashed a sharp change in market expectations following its Wednesday meeting, helping to curtail inflation fears. The idea of the first rate hike being pulled forward into 2023 with a possibility of 2022 elicited a change in the inflation trade and a resetting of ... READ MORE >
A 2021 ‘taper tantrum’? Not likely, but requires monitoring
Over the past month, there has been much speculation by financial market participants that the Federal Reserve is preparing to pare back or change the outright composition of its $120 billion in monthly asset purchases—$80 billion in treasuries and $40 billion in mortgage-backed securities—that have ... READ MORE >
CHART OF THE DAY: Fed projects U.S. will reach pre-pandemic goals by end of 2022
The Federal Open Market Committee’s quarterly projections for economic growth, unemployment and inflation suggest the economy will be back on track and meeting pre-pandemic expectations by the end of 2022. This should play a role in resetting interest rate expectations by professional investors and firm ... READ MORE >