Fed sees higher rates in… 2023

19:12 16 June 2021

The Fed did the smallest change in monetary policy that it possibly could. The key message is – rates will eventually go up, just not too soon.

The dot-plot shows the most significant change for the markets. In March the majority at the FOMC saw no hikes through 2023. Now some see moves in 2022, the median sees 2 hikes in 2023 and the 2023 dots are scattered (with some members seeing 3,4 or more hikes). This opens up the “rate hike” debate.

The other important change is IOER hike from 10 to 15bps. This is not much but it should sap some of the liquidity from the markets. Remember, record overliquidity pushed money to stocks and bonds.

Economic projections are barely changed – Fed remains defiant on inflation and this means should inflation outlook not improve, the Bank might be forced to act quicker.

Finally, the statement is unchanged – there’s no message on QE tapering which might be seen as a sweetener.

We will hear more from Powell at 7:30pm

This content has been created by XTB S.A. This service is provided by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, entered in the register of entrepreneurs of the National Court Register (Krajowy Rejestr Sądowy) conducted by District Court for the Capital City of Warsaw, XII Commercial Division of the National Court Register under KRS number 0000217580, REGON number 015803782 and Tax Identification Number (NIP) 527-24-43-955, with the fully paid up share capital in the amount of PLN 5.869.181,75. XTB S.A. conducts brokerage activities on the basis of the license granted by Polish Securities and Exchange Commission on 8th November 2005 No. DDM-M-4021-57-1/2005 and is supervised by Polish Supervision Authority.

Back

Join over 1.6 Million investors from around the world