Fed Act – Congress looks to Democrats agenda – Biden focuses on Mideast and China

The long awaited action by the Fed’s Federal Open Markets Committee (FOMC) was announced last week, and as markets had begun to suspect, the base interest rate was increased by 75bps.  

At his press conference after the rate hike announcement Chair Powell said the following; “Clearly, today’s 75 basis point increase is an unusually large one, and I do not expect moves of this size to be common.  From the perspective of today,
either a 50 or 75 basis point increase seems most likely at our next meeting.” Powell added  “but the Fed will take the data as it comes.”

The Feds change from 50bps to 75bps was  prompted by the high CPI number and the surprising consumer confidence number from the University of Michigan survey.  Obviously, there will be a lot more data points before the next FOMC meeting July 26-27.  The July meeting is late as there is no meeting scheduled until September. 

Another important date to watch in July 6 when the Fed releases the minutes from last week’s meeting.  It will be interesting to see if the new Biden appointees to the Board, Governors Cook and Jefferson, made comments on their views with respect to rates.  The Senate Banking Committee has approved the nomination of Michael Barr t...

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