Global Market – US Fed comment & Fed fund rate monitor tool indicate rate cut by Dec-23
This week we will discuss the action taken by US Fed and indicative pause by US Fed and we see bond yield indicating softening in economy and fed fund rate monitor tool indicate rate cut by end of 2023.
US Fed decision on 3-May-23
• Fed raises rates by 25 bps as expected to 5.25%
• Policy statement softens the rate guidance in a way consistent with past pauses
• Deletes reference to “some additional policy firming may be appropriate”
• Unanimous decision
• Fed Chair Powell: a decision on a pause was not made today
• Powell: we’ll make decisions meeting by meeting, based on data
Fed rate monitor tool – showing US Fed 13-Dec-23 meeting
Currently US Fed continues to focus on long term inflation target of 2% and has removed this reference from this policy statement – “some additional policy firming may be appropriate” and have guided for decision to be taken meeting by meeting.
Equichain Wealth Advisors: Market View & Opinion
This rate hike cycle by US Fed is one of the steepest rate hikes by US Fed and with last rate hike of 25-bps rate hike on 3-May-23. US interest rate is highest in last 4-decades.
US Fed has guided for pause and not pivot as of now, there is banking crisis going in regional banks in US which is taken care by US regulator. We believe market has not factored in any banking crisis in big US banks. We have earlier also seen US Fed changing its view based on incoming data and we would prefer to focus on incoming US economic data.