2023-01-30 09:05:02 $ECON Economic Data
01/30/23 01/3009:05 01/30/2309:05 | The FOMC meets for the first time in 2023 on Tuesday, WednesdayThe FOMC meets for the first time in 2023 on Tuesday, Wednesday. The policy decision will be announced on Wednesday at 14:00 ET. A stepped down 25 bp hike to a 4.625% rate is widely expected after downshifting to 50 bps in December following four straight 75 bp boosts. Comments from Governor Waller, one of the most hawkish on the Committee, who added his support for a further tapering to 25 bps largely sealed the deal. But, many believe a 50 bps is warranted. Recent data reflect still tight claims numbers and elevated inflation. Also policymakers' desire to achieve the terminal rate as quickly as possible argue for a 50 bps increase. Additionally, the financial markets have continued to ease, something Powell was concerned about and which showed up in the December minutes: "participants noted that...an unwarranted easing in financial conditions, especially if driven by a misperception by the public of the Committee's reaction function, would complicate the Committee's effort to restore price stability." Analysts believe those factors will see push-back from Powell in his press conference. And analysts do not expect him to follow the BoC which slowed its rate hikes to 25 bps and announced a pause. However, risks of a sharp downturn in Q1 growth could see the Fed take its foot off the brakes at the March meeting. Implied Fed funds futures are selling off slightly as the more hawkish tone is priced in. The projected terminal rate has edged up to 4.921% in June, though is still not showing the Fed's 5.1% median dot in 2023. |
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