FOMC Update

November 2, 2022
In a unanimous decision, the FOMC raised its benchmark interest rate by 75bp for the fourth consecutive time to a new rate range of 3.75%-4.00%, For the year, cumulative tightening stands at 375bp, the most in one year since 1980. The FOMC reiterated that it is highly attentive to inflation risks and that growth in spending and production are modest. Further increases are expected in 2023 with the benchmark rate projected to hit a high of 5.00%.
Rates and Market: 
  • Fed Funds Target: 3.75% – 4.00% 
  • Market Reaction: The stock market jumped with the S&P 500 Index up 35 points from pre-announcement levels
  • 2-year Treasuries through 7-year Treasuries fell an additional 7bp from pre-announcement levels and are now currently unchanged
  • 10-year Treasuries through 30-year Treasuries were basically unchanged post announcement and are now up ~3bp
The FOMC announced the following actions and analysis: 
  • Unanimous policy vote (12 – 0)
  • The FOMC will take cumulative tightening and lags into account with which monetary policy affects economic activity and inflation
  • Ongoing hikes will be necessary until rates are “sufficiently restrictive” to return inflation to 2% over time
  • The guidance sets the stage for 50bp and smaller hikes over time. The time to slow rate hikes may come as soon as the next meeting in December
  • Although the projected terminal rate ~5.00% and time necessary to wait for lagging effects (~10 months) are essentially unchanged from September’s statement and market sentiment
Read Full FOMC Statement
Implementation Note issued November 2, 2022