The Fed Reserve raised the key interest rate 75bps as expected for the 2nd straight time, bringing the Fed funds rate target range to 2.25% – 2.50% (previously 1.50% – 1.75%).

Here’s the Top 10 key takeaways from July 2022 FOMC:

  1. Federal Reserve Raises Rates By 75 basis points.
  2. FOMC Vote: 12 to 0 For Fed Funds Rate Action.
  3. Fed Says: Job Gains Have Been Robust and Unemployment Rate Has Remained Low.
  4. Fed Says: Recent Indicators of Spending and Production Have Softened.
  5. Notes On War in Ukraine: It Has Created Additional Upward
    Pressure on Inflation & Weighed on Global Economic Activity.
  6. Inflation Remains “Elevated” and Reflects “Pandemic Related Imbalances” with Higher Food & Energy Prices with Broader Price Pressures.
  7. Notes On Balance Sheet Runoff: Will Speed Up in September as Planned. Monthly Caps Rising To $35 Billion For mortgage-backed securities, $60 Billion For Treasury.
  8. Fed Will Allow Modest Deviations from Sated Amounts for Reinvestments “if needed for operational reasons.”
  9. FOMC Is Strongly Committed to Returning Inflation to 2% as its goals.

FOMC expects the ongoing increases in target range will be appropriate, while Chair Powell stated the “unusually large hike might be appropriate in Sep 2022 if the price pressures have not sufficiently abated. Meanwhile, looking ahead to the Fed’s Sep 20 – 21 meeting, the CME FedWatch tool assigns a 65% probability of a 50bps rate hike and 35% probability of a 75bps hike.

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