March 15-16 FOMC review: we have full throttle lift off

Thursday 17 March 2022

Investment Talks

March 15-16 FOMC review: we have full throttle lift off

March 2022 | The Fed voted 8-1 to raise the target range for the fed funds rate by 25bp, to 0.25-0.50%, and signalled more rate hikes. It formally ended QE and signalled the beginning of a reduction in the holdings of Treasury securities and agency mortgage-backed securities in the coming meetings. Overall, Fed members are concerned about elevated risks of inflation and are willing to act accordingly. Fed officials now expect the fed funds rate to rise above its long-run terminal rate.

01 | The Federal Open Market Committee (FOMC) announcement was far more hawkish than investor and market expectations. The Fed voted 8-1 to raise the target range for the fed funds rate by 25bp, to 0.25-0.50%, and signaled more rate hikes.

02 | Chair Jerome Powell restated that the Fed’s “Dot plot” showed seven interest rate hikes this year (inclusive of the first 25bp hike) and expressed a willingness to adjust policy as needed in the future. He stated that the probability of recession is not elevated.

03 | The short end of the US yield curve is more appropriately priced now that the market has discounted a more aggressive tightening cycle. For risky assets, the Fed’s general affirmation of market expectations is supportive, as near-term policy uncertainty wanes.

Inv Talks - Fed meeting - Mar 22

Important Information

Unless otherwise stated, all information contained in this document is from Amundi Asset Management US (Amundi US) and is as of March 17, 2022. Diversification does not guarantee a profit or protect against a loss. The views expressed regarding market and economic trends are those of the author and not necessarily Amundi US and are subject to change at any time based on market and other conditions, and there can be no assurance that countries, markets or sectors will perform as expected. These views should not be relied upon as investment advice, a security recommendation, or as an indication of trading for any Amundi product. This material does not constitute an offer or solicitation to buy or sell any security, fund units or services. Investment involves risks, including market, political, liquidity and currency risks. Past performance is not a guarantee or indicative of future results. Amundi Asset Management US is the US business of the Amundi Asset Management group of companies.

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