Federal Reserve Kept Rates Unchanged, Surprises with Pivot Towards Rate Cuts

The Federal Reserve kept rates unchanged in a target range of 5.25-5.50% in unanimous vote at their December FOMC, which was expected. The Fed’s move in the Summary of Economic Projections (SEP) quarterly “dot plot” however caught markets by surprise. The median federal funds rate for 2024 was lowered to 4.6%, down from 5.4% in 2023. That points to the prospect of three rate cuts next year versus only two that were projected at the time of the September SEP. … Continue reading “Federal Reserve Kept Rates Unchanged, Surprises with Pivot Towards Rate Cuts”

Federal Reserve Kept Rates Unchanged; Eases Financial Conditions

The Federal Reserve kept rates unchanged in a target range of 5.25-5.50% in unanimous vote at their November FOMC. Fed said economic activity grew at a “strong pace” and inflation remains “elevated”. Minor statement changes added reference to tightened financial conditions, which just repeated Powell’s remarks from two weeks ago. Each meeting remains ‘live’ but not very convincingly. The effects of the eased financial conditions at a curiously vulnerable point for inflation risk it would appear. Yields came off and … Continue reading “Federal Reserve Kept Rates Unchanged; Eases Financial Conditions”

Federal Reserve Kept Rates at 22-Year High 5.25-5.50% Range as Expected

The Federal Reserve kept rates unchanged in a target range of 5.25-5.50% in unanimous vote at their September FOMC and updated economic projections. The statement comes the day after yields on 10s and shorter tenors hit fresh highs for the year with the 2-yr yield reaching a level not seen since 2006 while the 10-yr yield hit a level not seen since November 2007. According to the CME FedWatch Tool, there is a 96.5% probability of no hike today. However, … Continue reading “Federal Reserve Kept Rates at 22-Year High 5.25-5.50% Range as Expected”

Fed’s Powell at Jackson Hole; Inflation: Progress and the Path Ahead, the Market Response

Fed Chairman Powell’s speech from the Jackson Hole Symposium in Wyoming on Friday offered little new but those hoping so were disappointed. The Fed Chairman reiterated that the Federal Reserve is prepared for more rate hikes, though he cautioned they are in a position to “proceed carefully” when it comes to assessing incoming data. Powell acknowledged that the economy has not been cooling as expected, which could be viewed as a signal that more rate hikes are to come, or … Continue reading “Fed’s Powell at Jackson Hole; Inflation: Progress and the Path Ahead, the Market Response”

Federal Reserve Raise Rates to 22-Year High 5.25-5.50% Range as Expected

The Federal Reserve raised rates 25bps to a target range of 5.25-5.50% in unanimous vote at their July meeting as expected. According to the CME FedWatch Tool, there is a 96.5% probability of a 25-basis points rate hike today. However, there is a less than 40.0% probability of a second-rate hike at any of the remaining FOMC meetings this year. This statement is virtually identical to the June one, other than the shift to a ‘moderate’ pace of growth from … Continue reading “Federal Reserve Raise Rates to 22-Year High 5.25-5.50% Range as Expected”

Federal Reserve Leave Rates Unchanged as Expected. See 5.6% Fed Fund Rate at Year End

The Federal Reserve left rates unchanged in a target range of 5.00-5.25% in unanimous vote at their June meeting as expected. Market Fed futures pricing suggested 8% of a 25-bps hike before the decision while the vast majority of economists predicting no change. Stock markets sold off and the US dollar went higher after the Fed raised the dot plot, with the median moving all the way to 5.6%, which implies two more hikes. The 2024 dot moved up to … Continue reading “Federal Reserve Leave Rates Unchanged as Expected. See 5.6% Fed Fund Rate at Year End”

Federal Reserve Raises Rates 25bps as Expected, Removes Additional Firming May be Appropriate

The Federal Reserve raised rates by 25 bp to a target range of 5.00-5.25% in unanimous vote at their April meeting as expected. Market Fed futures pricing suggested 88% of a 25-bps hike before the decision while the vast majority of economists were also predicting a hike with a handful predicting no change. Fed removed, “The Committee anticipates that some additional policy firming may be appropriate” Meaning a hiking bias here but no longer an explicit call to future hiking. … Continue reading “Federal Reserve Raises Rates 25bps as Expected, Removes Additional Firming May be Appropriate”

Federal Reserve Raises Rates 25bps as Expected, Project One More 25bps Hike

The Federal Reserve raised rates by 25 bp to a target range of 4.75-5.00% in unanimous vote at their February meeting as expected. Market Fed futures pricing suggested 81% of a 25-bps hike before the decision while the vast majority of economists were also predicting a hike with a handful predicting no change or a cut. Fed projection show there will be one more 25 basis point hike this year and 75 basis point cuts in 2024. Fed statement deletes … Continue reading “Federal Reserve Raises Rates 25bps as Expected, Project One More 25bps Hike”

Federal Reserve Raises Rates 25bps as Expected, Disinflationary Process has Started

The Federal Reserve raised rates by 25 bp to a target range of 4.50-4.75% in unanimous vote at their February meeting as expected. Market Fed futures pricing suggested a 96% chance of a 25 bps hike. The markets focused on “ongoing increases in the target range will be appropriate.” Fed says “Inflation has eased somewhat but remains elevated.” in a change from “Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price … Continue reading “Federal Reserve Raises Rates 25bps as Expected, Disinflationary Process has Started”

Federal Reserve Raises Rates 50bps as Expected, Hawkish Revisions to Unemployment and Inflation

The Federal Reserve raised rates by 50 bp to a target range of 4.25-4.50% at their December meeting. The markets focused on the changes in the dot plot showing Fed funds finishing 2023 above 5% and hawkish revisions to the unemployment, GDP and inflation forecasts. A higher-for-longer scenario that continues in 2024 and 2025 dots. Stock markets sold off on the changes. Most officials project an unemployment rate rising to 4.6% or higher by end of 2023 and stays above … Continue reading “Federal Reserve Raises Rates 50bps as Expected, Hawkish Revisions to Unemployment and Inflation”