Good afternoon,

Today’s announcement of a 25 bp increase by the Federal Reserve Bank was largely expected and brought the Fed funds target range of 5.00-5.25% in line with March’s dot plot median (i.e., the FOMC’s terminal rate consensus from six weeks ago).
At Powell’s press conference, the Fed Chair stated that a “meaningful change” but also said “a decision on a pause was not made today.” Josh Nye, Royal Bank of Canada Senior Economist wrote in a report today that “with 7 of 18 FOMC participants in March thinking rates would have to move even higher, we can’t rule out one more hike at this stage. But in our view this new language suggests the Committee’s base case is to pause in June—in line with our forecast, consensus, and market pricing—and the onus is on data to surprise to the upside for rates to rise further.”
Nye went on further to report that “other changes to the policy statement were limited, with the Committee continuing to point to modest economic growth, robust job gains, low unemployment, and elevated inflation. While Chair Powell said the labor market remains “very tight” he noted “some signs that supply and demand in the labor market are coming back into better balance” as well as evidence that wage growth is easing. He also pointed to signs of policy traction and said the economy is likely to face “further headwinds” from tighter credit conditions due to strains in the banking sector. Between growing cracks in the labor market, signs the economy is losing momentum, and uncertainty around the impact of banking turmoil, we think the Fed has plenty of cause to move to the sidelines after today’s rate increase”.

Please let us know if you have any questions or if there is anything that my team and I can do to help. We can also be made available to speak to any friends or family members who may need reassurance during these times.

Have a great week,

Devin