FOMC Update
May 3, 2023
As expected, the FOMC raised its benchmark rate by 25bp to a new range of 5.00%-5.25%. This rate hike marks the 10th hike in a row since the Fed began hiking in May 2022. This meeting also marks the second statement in a row that the FOMC has unanimously softened its stance towards further tightening, removing key statement language that “The Committee anticipates that some additional policy firming may be appropriate…”. Rates and Market:
- Fed Funds Target: 5.00%-5.25%.
- Market Reaction: S&P 500 index and Treasuries remained largely unchanged post announcement (trading up 0.3% and up 6bps across the curve pre-announcement respectively).
The FOMC announced the following actions and analysis:
- Unanimous policy vote.
- The Fed maintains its plan to shrink the balance sheet each month by as much as $95B and will take into account the extent to which additional policy firming may be appropriate, given that the Committee remains highly attentive to inflation risks, though tighter credit conditions will weigh on the economy and prices.