The long-awaited action by the Fed’s Federal Open Market Committee (FOMC) was announced on Wednesday, and as markets had begun to suspect, the base interest rate was increased by 75bps. Until the release of the hot CPI and the University of Michigan consumer confidence numbers, markets were banking on 50bps, based largely on Chair Powell’s comments after the May FOMC meeting. Powell has now led forecasters to expect another 75bps hike when the Committee meets July 26-27. The July meeting is late as there is no meeting scheduled until September. 

Another date to watch is July 6 when the minutes of this week’s FOMC will be released. It will be interesting to see if the two new Biden Fed Governors spoke during the proceedings.

While the Fed made the week’s big economic news on the political front, the news was dominated by continued negotiations in the Senate over a compromise gun package. In a move that increased optimism on the part of gun control advocates, Republican Leader Mitch McConnell said that he will likely vote for the compromise. As the week came to an end, the Senate talks were hung up on which states would get grants for mental health, and particularly whether a state could get a grant if it failed to pass a so-called “red flag” ...

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