Moments Ago
Federal Reserve will take a ‘data dependent’ approach going forward
Federal Reserve Chair Jerome Powell said the central bank will determine the pace of future monetary policy tightening after reviewing the data.
“Looking ahead, we’ll take a data-dependent approach to determining the extent to which additional policy firming may be appropriate,” he said.
— Sarah Min
6 Mins Ago
Few surprises in the Fed’s latest statement, says Bleakley Financial Group
Bleakley Financial Group’s chief investment officer Peter Boockvar said the Fed’s Wednesday post-meeting statement hit much of the same points it did during the March meeting.
“They specifically repeated that ‘The US banking system is sound and resilient'” Boockvar noted, adding that the central bank also reiterated that “tighter credit conditions for households and businesses are likely to weigh on economy activity, hiring, and inflation.”
“But, as to be expected and certainly by the Fed funds futures market, it’s just about time to call a time-out, which implies the game/fight against inflation is still ongoing but at least they can sit back and determine ‘the extent to which additional policy firming may be appropriate to return inflation to 2% over time,'” Boockvar added.
“I think if the reporters get out of him to explicitly acknowledge that it’s time to take a rate hiking break, he will do his best to reiterate that rates are not going to be cut like the fed funds futures market are pricing in,” Boockvar continued.
— Hakyung Kim
18 Mins Ago
The Fed might be putting rate hikes back in the tool kit, strategist says
The Federal Reserve omitted a sentence in the previous statement saying that “the Committee anticipates that some additional policy firming may be appropriate” for the Fed to achieve its 2% inflation goal. Adam Crisafulli, founder of Vital Knowledge believes that it is a clear indication that the Fed could pause rate hikes.
“This is a strong signal from the Fed that the Funds Rate has hit its cycle ceiling – Powell won’t close the door to incremental hikes completely, but removing that line is the FOMC’s way of telling markets they’re putting rate hikes back in the tool kit,” Crisafulli said in a note.
— Yun Li
19 Mins Ago
Traders zero in on a key statement omitted from Fed statement
Bond yields turned lower and stocks inched higher as traders weighed the latest post-meeting statement from the Federal Reserve.
This time, the central bank seemed to soften its stance on future rate hikes, dropping a line about “additional policy firming” from its statement.
-Darla Mercado
27 Mins Ago
Fed statement changes line about ‘additional policy firming’
One major change in Wednesday’s Fed statement is the omission of a key phrase that in prior meetings was seen as a sign that the central bank would keep hiking.
“The Committee anticipates that some additional policy firming may be appropriate,” the March statement said.
Instead, the new statement says this:
“In determining the extent to which additional policy firming may be appropriate to return inflation to 2 percent over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.”
— Jesse Pound
32 Mins Ago
The Federal Reserve hikes interest rates by a quarter point
The central bank raised interest rates by a quarter of a percentage point, a move that was broadly expected by the market.
The increase takes the fed funds rate to a target range of 5% to 5.25%.
It was a unanimous decision by the Federal Open Market Committee.
Read more here.
–Darla Mercado
51 Mins Ago
Here’s what the market is doing ahead of the Fed’s decision
Stocks ticked higher as the Federal Reserve’s 2 p.m. ET rate decision announcement approached.
As of about 1:45 p.m., the S&P 500 gained 0.3%, and the Nasdaq Composite added 0.5%. The Dow Jones Industrial Average ticked higher by 0.1%.
Bond yields were lower, with the rate on the 10-year Treasury down about 6 basis points to 3.37%. The rate on the 2-year Treasury was 3.92%, down 5 basis points.
Oil prices fell. West Texas Intermediate crude futures fell nearly 4%, and Brent futures slipped 3.6%.
–Darla Mercado
An Hour Ago
Stocks could see a sharp rally if this winds up being the Fed’s last hike
Investors are awaiting the central bank’s next steps, and they could be rewarded if this interest rate hike is the last one in the Federal Reserve’s tightening cycle.
An analysis by CNBC Pro found that the stock market gets a boost one month to 12 months following the end of the Fed’s hiking cycle. The S&P 500 averaged an 8% gain and 21% return in the 3 months and 12 months following the final rate hike in a series.
Read more here.
–Darla Mercado, Brian Evans
An Hour Ago
Investors turn their focus to the Fed’s next steps
The market is all but certain that the Federal Reserve will push forward a 25-basis point rate hike this afternoon, bringing its benchmark funds rate to 5% to 5.25%.
The real question that’s bedeviling investors now is whether the central bank will indicate an end to its policy tightening or will it leave the door open for more interest rate increases to cool the economy.
A multitude of factors will weigh into the policy-setting Federal Open Market Committee’s next steps. Inflation has been on a cooling trend, with the March consumer price index rising 5% from a year ago – but it doesn’t seem to be slowing at a pace that would appease the Fed. Economic growth is also showing signs of slowing. April’s jobs report looms ahead, due out on Friday.
The recent trouble in the regional bank space, including First Republic’s failure and subsequent takeover by JPMorgan, could also factor into the decision.
This means what the Fed says in its statement with respect to forward guidance – and what Chair Jerome Powell details in his upcoming presser – are even more important this time.
Read more on what’s ahead for the Fed here.
–Darla Mercado, Jeff Cox
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