FOMC Lifts Fed Funds By 25 bps, Hawkish Talk From Members Grow, Dot Plot Suggest Six More Hikes This Year

The Fed conducted its long-awaited lift-off and the market appeared largely encouraged by the choreographed nature of it all. Shorty after lift-off, there was a few hawkish comments from Federal Open Market Committee (FOMC) members that we’ll discuss below, but overall the reaction from the market has been positive and lift-off happened to coincide with one of the most positive weeks for stocks in a year.

The vote for raising the Federal Funds target from a range of 0 to .25 to a range between .25 and .50 was 8 to 1. The only dissent was St. Louis President James Bullard who would have preferred to have made a 50-bps hike.  The committee also announced that it expects its plan for the balance sheet to be ready by May 3-4.  Chairman Powell commented that the labor market was very tight, maybe even problematically so. The very tight job market raises the unwanted specter of a potential wage-price spiral.

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