FOMC

The attached tables and charts released on Wednesday summarize the economic projections made by Federal Open Market Committee participants in conjunction ...

In the preview report we wrote on June 6 that outlined our views about the June 15 FOMC meeting, we made the case for why a 50 bps rate hike was all but ...

But, that report was written before the May CPI data were released on June 10,which showed that inflation was once again higher than expected. Specifically, the overall CPI rose 1.0% in May, which boosted the year-over-year rate of inflation to 8.6% (Figure 1). Furthermore, the data were disheartening because they showed broad-base price pressures in the economy. In the preview report we wrote on June 6 that outlined our views about the June 15 FOMC meeting, we made the case for why a 50 bps rate hike was all but assured.

The attached tables and charts released on Wednesday summarize the economic projections made by Federal Open Market Committee participants in.

The SPDR S&P 500 ETF Trust (NYSE: SPY) rebounded a bit from its early week downturn on Wednesday morning ahead of a critical Federal Open Market Committee ...

A tougher approach will no doubt weaken demand as markets wait — and hope — that supply chain headwinds begin to ease and offer another quiver to fight higher prices," Krosby said. - Jefferies +75bps - JPMorgan +75bps - Goldman +75bps - CapEcon +75bps - Barclays +75bps

The Fed issues a 75 basis point rate hike, in line with market expectations. Market reaction muted thus far.

- “We think the public generally sees us as very likely to get inflation down to 2% — and that’s critical, it’s absolutely key to this whole thing. We’re not looking to have a higher unemployment rate, but I would certainly look at that as a successful outcome.” While the market was pricing in 50 basis points in June and July, that has now increased to an expectation of 75 basis points per meeting. [...] A 4.1% unemployment rate with inflation on its way to 2%, I think that would be a successful outcome. Big trades were placed on both sides: a sign of how institutional traders are forced to be nimble during highly volatile events like this. Even the words that Jerome Powell uses in his post-FOMC speech must be carefully chosen to prevent adverse reactions. Ready to start trading? Much of this move can be blamed on Friday’s record-breaking CPI Report, which indicated that the US economy had reached a 40-year inflationary high. - “It does appear the US economy is strong and well-positioned to deal with higher interest rates.” [...] “There’s no sign of a broader slow down in the economy.” - “The next meeting in July will likely see a rate increase of between 50 to 75 basis points.” - Data shows inflation expectations are still in a place where short-term inflation remains elevated, but Powell expects “inflation to come down sharply in the medium-term”. - The market reacted mostly positive to the news, with the Nasdaq up more than 3%, the S&P 500 up more than 2%, and the Dow Jones Industrial Average up more than 1%.

Job gains have been robust in recent months, and the unemployment rate has remained low. Inflation remains elevated, reflecting supply and demand imbalances ...

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 seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. The invasion of Ukraine by Russia is causing tremendous human and economic hardship. Job gains have been robust in recent months, and the unemployment rate has remained low. Overall economic activity appears to have picked up after edging down in the first quarter.

Will the FOMC deliver a 75-bps rate hike today? How will markets react?

After the Fed raises rates by 75-bps in June, there are seven 25-bps rate hikes discounted through the end of 2022 thereafter. After a new multi-decade high in US inflation rates, markets have once again dragged forward expectations for a rapid pace of rate hikes over the coming months. - We’ll discuss how markets may react to the June Federal Reserve rate decision starting at 13:45 EDT/17:45 GMT on Wednesday, June 15, 2022.