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Federal Reserve <br />Source: Federal Reserve Source: Bloomberg <br />As expected at the May meeting,the Federal Open Market Committee voted unanimously to raise the target federal funds rate by 0.25%to a <br />range of 5.00 -5.25%.Notably,the committee omitted a line from its March statement referencing that “some additional policyfirming may be <br />appropriate.”Instead,the FOMC will determine “the extent to which additional policyfirming may be appropriate,”implying a potential pause <br />that will be data dependent.Fed Chair Powell reiterated the committee’s focus on bringing down inflation to their 2%target and indicated <br />that their outlook did not support rate cuts,contrary to the market consensus.The statement also emphasized that the U.S.banking system is <br />“sound and resilient”and acknowledged the tightening of financial conditions.The March Summary of Economic Projections indicated little <br />change,with the consensus target federal funds rate rising to 5.1%with no rate cuts in 2023,falling to 4.3%in 2024 (up from 4.1%previously), <br />and declining to 3.1%by the end of 2025.Considering the totality of economic data,the Chandler team continues to believe the Fed islikely <br />near a pause in their rate hiking cycle and will maintain higher rates for some time. <br />0.00% <br />0.50% <br />1.00% <br />1.50% <br />2.00% <br />2.50% <br />3.00% <br />3.50% <br />4.00% <br />4.50% <br />5.00% <br />5.50% <br />Effective Federal Funds Rate <br />Yield (%)2,000,000 <br />3,000,000 <br />4,000,000 <br />5,000,000 <br />6,000,000 <br />7,000,000 <br />8,000,000 <br />9,000,000 <br />10,000,000 <br />Federal Reserve Balance Sheet Assets <br />In$ millions11