FOMC minutes were released at 7:00 pm BST today. The document related to the June 13-14, 2023 meeting, in which Powell indicates that the Federal Reserve (FED) made a hawkish pause and announced plans for two more interest rate hikes, with the next one expected at July's meeting. FOMC minutes should clarify this matter. Key takeaways:
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All participants agreed that it was appropriate to maintain the target range for the federal funds rate at the existing level of 5.25%.
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The FED Committee noted that the economic activity had expanded at a modest pace in the first quarter. The labor market continued to be tight, with robust job gains in recent months, and the unemployment rate remained low.
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Recent developments in the banking sector were expected to result in tighter credit conditions for households and businesses, which would likely weigh on economic activity, hiring, and inflation. However, the extent of these effects remained uncertain.
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Some members commented that, based on their expectations that progress in returning inflation to 2% could continue to be unacceptably slow, additional policy firming would likely be warranted at future meetings.
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All members reaffirmed their strong commitment to returning inflation to the target 2.0% over time
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The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals. The FED's assessments will take into account labor market conditions, inflation pressures and inflation expectations, and financial and international developments.
US500 index did not react significantly to the FOMC minutes, which suggests that everything was priced in and the market was not surprised
