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No Surprises, Fed hikes by Three-Quarters of a Point, Says More Hikes Coming

This was a big yawner of a Fed meeting. It confirmed the widely expected.
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As Expected, Fed Hikes By 75 Basis Points

Here is the key snip from the FOMC Press Release

Recent indicators of spending and production have softened. Nonetheless, job gains have been robust in recent months, and the unemployment rate has remained low. Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures. Russia’s war against Ukraine is causing tremendous human and economic hardship. The war and related events are creating additional upward pressure on inflation and are weighing on global economic activity. The Committee is highly attentive to inflation risks.  

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals, the Committee decided to raise the target range for the federal funds rate to 2-1/4 to 2-1/2 percent and anticipates that ongoing increases in the target range will be appropriate. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in the Plans for Reducing the Size of the Federal Reserve’s Balance Sheet that were issued in May. The Committee is strongly committed to returning inflation to its 2 percent objective.  

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.

Ticking All the Boxes

  • 75 Basis Point hike to 2.25 to 2.50% - Expected 
  • Fed anticipates more hikes - Expected
  • Quantitative Tightening (QT) of treasuries and mortgages continues - Expected 
  • Strong commitment to a 2 percent objective - Expected
  • Statement on monitoring conditions - Expected
  • Fed mentioned robust jobs and the war in Ukraine - Expected

This was a short and boring press release. There were no dissents. 

The Fed will remain on auto-pilot, likely with half-point hikes until something other than housing breaks. 

Here are some Tweet comments.

Consumer Confidence Record Low

Stagflation

Thoughts on Fed Timing

"Today is the day when the Fed will hike interest rates into a recession. Tune in next year when they cut interest rates going into an expansion. The Fed is so bad they're literally the Costanza."

Following Back-Looking Data 

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"All the world waits on what a small group of people with backwards looking information will do to pretend they are in control of a financial system that is past the point of rescue."

The Fed Perpetually Chases Its Tail 

The comments of Jeff Booth, and Jared Dillian are accurate and to the point.

The Fed perpetually chases it tail and tales. 

A Prediction

The Fed will remain on auto-pilot, likely with half-point hikes until something other than housing breaks.

Prediction: Everything else will break at once.

This post originated at MishTalk.Com

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