FOMC, hot off the press

With CME, you and me all expecting .5% hike that’s a given. The wording will be interesting, but we all know the bond market is forcing them to do what they tried not to do for the longest time.

fomcAnyway, the eggheads assembled and the eggheads rendered their ‘decision’ (this is actually written before the release) but here will follow the statement within nanoseconds of its release.

Speed readers have at it.

May 04, 2022

Federal Reserve issues FOMC statement

For release at 2:00 p.m. EDT

Although overall economic activity edged down in the first quarter, household spending and business fixed investment remained strong. Job gains have been robust in recent months, and the unemployment rate has declined substantially. Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures.

The invasion of Ukraine by Russia is causing tremendous human and economic hardship. The implications for the U.S. economy are highly uncertain. The invasion and related events are creating additional upward pressure on inflation and are likely to weigh on economic activity. In addition, COVID-related lockdowns in China are likely to exacerbate supply chain disruptions. 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. 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. In support of these goals, the Committee decided to raise the target range for the federal funds rate to 3/4 to 1 percent and anticipates that ongoing increases in the target range will be appropriate. In addition, the Committee decided to begin reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities on June 1, as described in the Plans for Reducing the Size of the Federal Reserve’s Balance Sheet that were issued in conjunction with this statement.

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.

Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michelle W. Bowman; Lael Brainard; James Bullard; Esther L. George; Patrick Harker; Loretta J. Mester; and Christopher J. Waller. Patrick Harker voted as an alternate member at this meeting.

Implementation Note issued May 4, 2022




This Post Has 4 Comments

  1. Bart

    I guess everybody knew what the FED was going to do, we just never know how other participants are going to react to it. And then investors start to react to the reactions of other investors. Game theory: And not seldom the initial reaction is reversed the day after.

    1. Gary

      With AAII & Investors Intel at epic over-bearish levels, a ‘buy the news’ thing is not surprising at all.

      1. Bart

        I agree this time the odds favored that outcome, or at least that the risk reward was pretty good. With such negative sentiment, the downside seems limited to the potential upside. I was more commenting in a general sense. Participants often know what the FED is going to do, but much less so how other participants are going to react.

  2. Gary

    ‘other participants’: Ma, Pa, the Wharton big brains and a lot of machines and algos (gone wild).

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