June FOMC Meeting: Fed Worried About Inflation Expectations

Wednesday 15 June 2022

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June FOMC Meeting: Fed Worried About Inflation Expectations

June 2022 | On 15 June, the Fed hiked the Fed funds rate by 75 basis points (bp), to 1.50-1.75%, the first 75bp rate rise since November 1994. Chair Jerome Powell confirmed that recent readings regarding consumer inflation and inflation expectations caused committee members to realize a hike of that size was necessary.

01 | Chair Powell remained hawkish as he described the Fed’s focus on bringing down inflation. He was careful not to dismiss the possibility of a 100bp rate hike and reiterated the Fed remained data-dependent.

02 | The Fed is not on a preset course to raise the funds rate by another 75bp at July’s FOMC meeting, but rather remains data-dependent. Powell stated the 75bp rate hike is unusual and will not become regular policy.

03 | We maintain a cautious investment bias, given that the outlook formonetary policy and its impact on inflation and the economy remain both fluid and uncertain. The likelihood of the Fed achieving a soft landing is clearly declining.

June FOMC Meeting: Fed Worried About Inflation Expectations

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