FOMC

Although overall economic activity edged down in the first quarter, household spending and business fixed investment remained strong.

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. 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 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. The invasion of Ukraine by Russia is causing tremendous human and economic hardship. Although overall economic activity edged down in the first quarter, household spending and business fixed investment remained strong.

Traders may look at today's press conference as marking “peak hawkishness” for the Fed, at least in the short term...

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. This material has been prepared using the thoughts and opinions of the author and these may change. Looking at the US dollar index, a pullback toward the 100.00-101.00 area will be favored as long as resistance in the 103.00-1.03800 range holds: The US dollar index has dropped to a one-week low in the mid-102.00s, US indices are seeing among their biggest one-day rallies in months, yields are falling across the board, and gold is gaining more than 1% for what could be its strongest day since March. In short, a central bank obsessed with forward guidance, “communication as a policy tool,” and avoiding surprising markets at all costs has essentially given its road map for the summer: The Fed plans on raising interest rates by 50bps in June and July to bring the Fed Funds rate to the lower end of its 2%-3% neutral range, then likely follow that up with a couple 25bps hikes as it evaluates incoming data.

The Federal Open Market Committee (FOMC) raised its target range for the fed funds rate by 50 basis points at its meeting on May 3-4, 2022.

The SOMA will reduce its holdings of U.S. agency debt and U.S. agency mortgage-backed securities (MBS) initially by $17.5 billion per month, rising to $35 billion per month after three months. Beginning on June 1, 2022, the System Open Market Account (SOMA) will reduce its holdings of U.S. Treasury securities by $30 billion per month, rising to $60 billion after three months. It noted that the invasion and related events are adding to inflationary pressures and are likely to have a negative impact on economic activity. Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures." Job gains have been robust in recent months, and the unemployment rate has declined substantially. The FOMC's press release stated: "Although overall economic activity edged down in the first quarter, household spending and business fixed investment remained strong.

The Federal Reserve his here with the first 50 basis point rate hike since May of 2000 - which was followed a couple months later by the tech bust.

Before the fireworks, the Nasdaq 100 is holding a critical spot of support around the 13k level. There’s also an expectation for some information on how the bank is looking to address QT in the coming months as the Fed begins to un-do some of the accommodation that was built in around the pandemic. This is where Chair Powell can begin to gird the runway for the June rate decision in which the bank is expected to keep up their hawkish pace. While the March FOMC rate decision brought lift-off after an unprecedented stimulus outlay through the Coronavirus pandemic, this rate decision is the first in which the bank is expected to hike by 50 basis points. The rate decision has been released and the Fed has hiked by 50 for the first time since May of 2000. And there’s another spot of support a little lower, around 102.82. Even the Fed’s ‘softer’ framework for rate hikes still exceeds that of counterparts in Europe or Japan, so this may be a situation where those other currencies find difficulty substantiating any long-term run, at least until something changes on that front. Chart prepared by James Stanley; S&P 500 on Tradingview Chart prepared by James Stanley; S&P 500 on Tradingview The press conference is now over and the aftermath here is something of note. - This is a 'live article,' meaning that it will be updated through the rate decision and press conference. That, perhaps, worked a little too well as the dot com bust later that summer.

The Federal Reserve raised interest rates by half a percentage point, as the central bank's firefight with high inflation continues.

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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 ...

Talking about the Russia-Ukraine war, FOMC said, "the invasion of Ukraine by Russia is causing tremendous human and economic hardship. The invasion and related events are creating additional upward pressure on inflation and are likely to weigh on economic activity." Federal Reserve Chair Jerome H. Powell at the monetary policy conference today said, “I would like to take this opportunity to speak directly to the American people. In its statement, Fed stated that the committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Inflation is much too high. With appropriate firming in the stance of monetary policy, the Committee expects inflation to return to its 2% objective and the labor market to remain strong.