The Federal Reserve raised rates by a quarter of a percent at their March meeting, The QE Taper pace as scheduled ended in March. The rate hike was priced in; however, the surprise is seven 7 hikes in the dot plot. The market has priced that in, but expectations are that generally the Fed lags the market. Last meeting the dot plot showed four hikes in 2022
Federal Reserve FOMC Statement
Federal Reserve Announcement Wednesday 16 March 2022 14:00:00 ET
The FOMC raises the target rate by 25 basis points to 0.25% to 0.50%
Conference To Follow At 2.30 ET PM With Chairman Powell
Highlights
- Rates raised to 0.25% to 0.50%
- Taper pace ended in March
- Expects to begin reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities at a coming meeting.
- Anticipates that ongoing increases in the target range will be appropriate.
- The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals
March 16 22 FOMC STATEMENT CHANGES via @Newsquawk
The full statement from the March 2022 Fed Decision
Indicators of economic activity and employment have continued to strengthen. Job gains have been strong in recent months, and the unemployment rate has declined substantially. Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures.
The invasion of Ukraine by Russia is causing tremendous human and economic hardship. The implications for the U.S. economy are highly uncertain, but in the near term the invasion and related events are likely to create additional upward pressure on inflation and weigh on economic activity.
The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. With appropriate firming in the stance of monetary policy, the Committee expects inflation to return to its 2 percent objective and the labor market to remain strong. In support of these goals, the Committee decided to raise the target range for the federal funds rate to 1/4 to 1/2 percent and anticipates that ongoing increases in the target range will be appropriate. In addition, the Committee expects to begin reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities at a coming meeting.
In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals. The Committee’s assessments will take into account a wide range of information, including readings on public health, labor market conditions, inflation pressures and inflation expectations, and financial and international developments.
Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michelle W. Bowman; Lael Brainard; Esther L. George; Patrick Harker; Loretta J. Mester; and Christopher J. Waller. Voting against this action was James Bullard, who preferred at this meeting to raise the target range for the federal funds rate by 0.5 percentage point to 1/2 to 3/4 percent. Patrick Harker voted as an alternate member at this meeting.
FOMC Dot Plot and Central Tendencies from March 16 2022
Implementation Note issued March 16, 2022
Source: Federal Reserve
From the TradersCommunity Research Desk