FOMC June Meeting Decision and Aftermath - The Fed raised its fed funds rate by 25 bps to 5.25% on June 29, a move expected by most analysts, but the statement was a suprise. You can see the full analysis on the decision here:
FOMC June Meeting Decision
Here are some of the aspects that I cover:
1. The FED maintained its description of inflation expectations as "remain contained" while the impact of resource utilization and rising energy prices to continue to only "have the potential to sustain inflation pressures".
2. However, the FED changed the part of the statement regarding economic growth. FOMC gave this assessment of the US economy in it's June 29 statement: indicators suggest that economic growth is moderating from its quite strong pace earlier this year, partly reflecting a gradual cooling of the housing market and the lagged effects of increases in interest rates and energy prices.
3. Regarding future decisions, the FED said: "The extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information. In any event, the Committee will respond to changes in economic prospects as needed to support the attainment of its objectives".
The statement as a whole was dollar negative and dovish. The FED issued a more certain note towards moderating economic activity, while making no upgrade in its inflation vigilance.
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