Scotia summarise the Federal Open Market Committee (FOMC) outcome:
The FOMC hiked by 25bps and guided one more possible hike to come.
• They left the terminal rate unchanged, but reduced next year’s projected cuts.
• QT plans were left unchanged
• Tightened conditions equate to roughly a 25bps hike...
• ...but Powell emphasized high bidirectional uncertainty toward this estimate
And add:
- My overall impression is that what the FOMC did as described below is defensible. Too abruptly swinging in either direction could have rocked fragile confidence. That said, it's all just a bunch of placeholders for now and perhaps there will be greater clarity into the next 1–2 meetings that will inform their stance and future forecasts at the June meeting.
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If you need a catch-up on Wednesday's FOMC-bonanza:
- Federal Reserve hikes rates by 25 bps, as expected.
- The full FOMC statement for March 2023. Hikes by 25 bps
- FOMC dot plot and central tendencies from March 2023 meeting. EOY 2023 5.1%
- A comparison of the changes from February to March statements
- Powell opening statement: Inflation remains too high
- Powell Q&A: Before the banking issues, it looked like we would have to raise rates higher
- Before the Fed hike, before the press conference and at the end of the press conference
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inflation
