The latest Fed decisions
Everything you need to know about the latest Fed decisions.
The Fed’s Monetary Policy Committee (FOMC) met on January 31 and February 1 and decided to raise the Fed funds rate by 25 basis points (bps) to bring it to a range between 4, 50 and 4.75%. This rise has not changed our expectations for the Fed’s terminal rate at 5.25%.
The Committee decided to slow the pace of further increases to 25bps, as further increases will now be a matter of final adjustments.
The US central bank may be nearing the end of its hike cycle and markets are beginning to wonder when rates will be cut and when inflation will return to 2%.
Fed Chairman Jerome Powell reiterated that some time was still needed and that it would be difficult to bring inflation down significantly without causing a sharp economic slowdown.
However, Powell also added that US growth should remain subdued but positive, due to the improving outlook for global growth, and he was not particularly concerned about easing financial conditions.
The FOMC will update its forecast in March, but Powell does not expect a rate cut this year. He added, however, that “if we see that inflation is falling much faster than expected, this will obviously have an influence on our policy”.
Source : Amundi Institute, FOMC Meeting: Five takeaways, 3 février 2023