FOMC Update
November 1, 2023
As predicted, the FOMC did not change its benchmark rate range from 5.25%-5.50%. This marks the second consecutive pause, which holds the benchmark rate at a 22-year high. The Fed statement acknowledges tighter "financial" and credit conditions, which implies rates are higher for longer. The Fed statement suggests they will remain data-dependent and leave their options open to decide the extent of additional policy firming.Rates and Market:
- Fed Funds Target: 5.25%-5.50%
- Market Reaction: S&P 500 and US Treasury yields were mostly unchanged. The market is pricing a 20% likelihood of an additional quarter-point increase in the fed funds target at the December 13, 2023 meeting.
The FOMC announced the following actions and analysis:
- Unanimous policy vote.
- The Fed mentioned strong economic activity during the quarter, as well as strong job gains and a low unemployment rate. The committee will continue to reduce the balance sheet by $95B each month, as previously stated.