🏛️ Fed AI Savant 🏛️

Meeting: FOMC Meeting 2025-06-18

Action: Maintained

Rate: 4.25%-4.50%

Magnitude: No change

Forward Guidance: The Fed signaled that future rate adjustments will depend on incoming data, the evolving economic outlook, and the balance of risks. While some policymakers see rate cuts as likely this year, others prefer to wait for more confidence that inflation is sustainably moving toward 2%, keeping the door open to cuts but emphasizing caution.

Key Factors:

• Inflation remains above the 2% target but has cooled from recent peaks, with May PCE inflation at 2.3% and core PCE at 2.6%.
• Solid economic growth and a strong labor market, with unemployment at 4.2% and solid job gains, though signs of softening are emerging.
• Elevated uncertainty around trade policy, particularly tariffs, which are seen as a temporary upward pressure on inflation.
• Business and consumer sentiment remain weak despite solid spending, with caution due to geopolitical and policy risks.

Economic Outlook: The Fed expects continued economic growth at a solid pace, though likely moderating, with a gradual softening in labor market conditions. Inflation is projected to decline toward 2% by 2027, supported by anchored long-term expectations. However, risks remain tilted to higher inflation due to tariffs and supply chain effects, while downside risks to growth persist from policy uncertainty.

Market Impact: Markets should expect a data-dependent path with potential rate cuts later in 2025, supporting modestly lower borrowing costs for businesses and consumers. Equity markets may remain supported by strong fundamentals, but volatility could persist if inflation or tariff-related risks re-emerge.

Source: Fed Minutes PDF

Meeting: FOMC Meeting 2025-05-07

Action: Maintained

Rate: 4.25%-4.50%

Magnitude: No change

Forward Guidance: The Fed signaled it will wait for greater clarity on the economic outlook before making any further rate moves, emphasizing it will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee remains prepared to adjust policy if risks emerge that could impede its goals of maximum employment and 2% inflation.

Key Factors:

• Elevated but moderating inflation (PCE at 2.3%, core PCE at 2.6%)
• Solid labor market with unemployment stable at 4.2% and steady payroll gains
• Significant uncertainty from new trade policies and tariffs affecting growth and inflation outlooks
• First-quarter GDP dip due to front-loaded imports, though underlying domestic demand (PDFP) remained strong

Economic Outlook: The Fed sees economic activity expanding at a solid pace despite a slight first-quarter GDP decline, which was distorted by a surge in imports ahead of expected tariffs. The labor market remains strong, with stable unemployment and solid job growth. However, inflation is still above the 2% target, and the outlook is clouded by rising uncertainty—particularly from trade policy—leading to increased risks of both higher unemployment and higher inflation.

Market Impact: Markets should expect a prolonged pause in rate changes, increasing emphasis on data dependency. Businesses and consumers can anticipate sustained borrowing costs, while investors may see continued volatility as trade policy and inflation risks evolve. A cautious Fed stance supports stability but delays potential rate cuts that could ease financial conditions.

Source: Fed Minutes PDF

Meeting: FOMC Meeting 2025-03-19

Action: Maintained

Rate: 4.25%-4.50%

Magnitude: No change

Forward Guidance: The Fed signaled it will carefully assess incoming data, the evolving economic outlook, and the balance of risks before making any future rate moves. While no rate cuts are imminent, the Committee remains prepared to adjust policy if risks emerge that could impede its goals of maximum employment and 2% inflation.

Key Factors:

• Inflation remains somewhat elevated, with core PCE at 2.8% and upside risks from trade policy
• Labor market conditions remain solid, with unemployment stable at 4.1%
• Economic growth is solid but slowing, with weaker consumer spending and sentiment
• Heightened uncertainty around trade, fiscal, and regulatory policies is weighing on business and household behavior

Economic Outlook: The Fed sees the economy expanding at a solid pace, though momentum has moderated. Employment remains strong with the unemployment rate at 4.1%, but risks to job growth are tilted downward due to policy uncertainty. Inflation is expected to remain above 2% in 2025, driven partly by tariff-related pressures, before gradually returning to target by 2027.

Market Impact: Markets should expect a prolonged pause in rate changes, supporting stability in borrowing costs for consumers and businesses. However, continued policy uncertainty and sticky inflation could keep financial conditions tighter for longer, potentially weighing on risk assets and capital spending.

Source: Fed Minutes PDF

Meeting: FOMC Meeting 2025-01-29

Action: Maintained

Rate: 4.25%-4.50%

Magnitude: No change

Forward Guidance: The Fed signaled it will maintain a restrictive policy stance and emphasized that future rate decisions will depend on incoming data, the evolving economic outlook, and the balance of risks. Additional rate adjustments will only be considered with further evidence of sustained progress toward 2% inflation.

Key Factors:

• Inflation remains above the 2% target, with core PCE at 2.8% and total PCE at 2.6%, showing only gradual disinflation
• Solid economic growth and a stable labor market, with unemployment at 4.1% and monthly job gains averaging 170,000
• Elevated uncertainty around potential trade and immigration policy changes that could pressure inflation
• Tight financial conditions, including higher long-term Treasury yields and mortgage rates, are providing additional monetary restraint

Economic Outlook: The Fed expects economic activity to continue expanding at a solid pace, with labor market conditions remaining strong and near maximum employment. Inflation is projected to gradually decline toward 2% over the medium term, though progress may be uneven. Risks to inflation are skewed to the upside, primarily due to potential policy changes and persistent core price pressures.

Market Impact: Markets should expect a prolonged pause in rate cuts, supporting higher yields on bonds and sustained borrowing costs for consumers and businesses. Equities may face volatility as investors adjust to the likelihood of higher-for-longer interest rates, particularly if inflation data remains sticky.

Source: Fed Minutes PDF

Meeting: FOMC Meeting 2024-12-18

Action: Lowered

Rate: 4.25%-4.50%

Magnitude: 0.25 percentage points

Forward Guidance: The Fed signaled it will slow the pace of future rate cuts and emphasized a cautious, data-dependent approach. Additional rate adjustments will depend on incoming economic data, the evolving outlook, and the balance of risks, particularly regarding inflation and labor market conditions.

Key Factors:

• Inflation remains above the 2% target, with recent readings higher than expected, especially in core services and shelter costs.
• Labor market conditions have eased but remain solid, with low unemployment and steady wage growth around 4%.
• Economic growth has been strong, supported by solid consumer spending, rising real wages, and favorable supply-side developments.
• Uncertainty around potential changes in trade, immigration, and fiscal policy is complicating the inflation outlook and increasing upside risks.

Economic Outlook: The Fed expects solid economic growth to continue, with inflation gradually moving toward 2% over the next few years but taking longer than previously anticipated. The labor market is expected to remain strong, though some participants see risks of further softening. Overall, the risks to both employment and inflation goals are viewed as roughly balanced, but with elevated uncertainty.

Market Impact: Markets can expect fewer and smaller rate cuts in 2025, leading to higher-for-longer borrowing costs for businesses and consumers. This may support the U.S. dollar and keep pressure on risk assets, while mortgage and loan rates remain elevated despite slight recent declines.

Source: Fed Minutes PDF

Meeting: FOMC Meeting 2024-11-07

Action: Lowered

Rate: 4.50%-4.75%

Magnitude: 0.25 percentage points

Forward Guidance: The Fed signaled that future rate decisions will be data-dependent, with further gradual easing likely if inflation continues to trend toward 2% and the labor market remains stable. The Committee emphasized it is not on a preset course and will adjust policy as needed based on incoming data and risks.

Key Factors:

• Inflation has made progress toward 2% but remains somewhat elevated
• Labor market conditions have eased but remain solid, with unemployment low at 4.1%
• Economic activity expanded at a solid pace in 2024
• Core PCE inflation was 2.7%, with housing services still elevated but expected to moderate

Economic Outlook: The Fed expects solid economic growth to continue, with real GDP slightly below potential in coming years and unemployment rising only modestly. Inflation is projected to decline further, reaching 2% by 2026 as supply and demand come into better balance. Risks to the outlook are seen as roughly balanced, though uncertainties remain around labor market resilience and inflation persistence.

Market Impact: Lower borrowing costs should support consumer spending and business investment, while mortgage and loan rates may stabilize or decline slightly. Equity markets may gain confidence from the Fed's cautious easing, though volatility could persist if inflation or geopolitical risks flare up.

Source: Fed Minutes PDF

Meeting: FOMC Meeting 2024-09-18

Action: Lowered

Rate: 4.75%-5.00%

Magnitude: 0.50 percentage points

Forward Guidance: The Fed signaled that future rate decisions will depend on incoming data, the evolving economic outlook, and the balance of risks. While additional cuts are likely if inflation continues toward 2% and employment remains stable, policymakers emphasized this move is not the start of a rapid easing cycle and that policy remains restrictive.

Key Factors:

• Inflation has made further progress toward the 2% target, with both total and core PCE inflation moderating, and monthly price increases showing broad-based cooling.
• Labor market conditions have cooled, with slower job gains, a rising unemployment rate (to 4.2%), and reduced hiring and job vacancies, though layoffs remain low.
• Economic growth remains solid, supported by resilient consumer spending and strong business investment, but the outlook shows signs of moderation in the second half of 2024.
• Downside risks to employment have increased, while upside inflation risks have diminished, leading the Fed to view the risks to its dual mandate as roughly balanced.

Economic Outlook: The Fed expects solid but moderating economic growth in 2024, with real GDP expanding at roughly its trend rate over the next few years. The labor market is seen as solid but cooling, with the unemployment rate expected to stabilize near current levels. Inflation is projected to continue declining toward the 2% target by 2026, supported by balanced supply and demand, slowing wage growth, and stable inflation expectations.

Market Impact: Lower borrowing costs are likely to gradually ease financial conditions, supporting consumer spending and business investment. Markets may see increased risk-taking in equities and credit, but the Fed’s caution about the pace of cuts suggests yields will remain range-bound in the near term.

Source: Fed Minutes PDF

Meeting: FOMC Meeting 2024-07-31

Action: Maintained

Rate: 5.25%-5.50%

Magnitude: No change

Forward Guidance: The Fed signaled that a rate cut could be on the table at the September 2024 meeting, but only if incoming data continues to show progress toward the 2% inflation target. Officials emphasized they need greater confidence that inflation is sustainably moving toward target before easing policy.

Key Factors:

• Inflation has eased but remains above 2%, with June's PCE inflation at 2.5% and core PCE at 2.6%
• Labor market conditions are moderating, with job gains slowing and the unemployment rate rising to 4.1%
• Recent disinflation is broad-based, including in housing services and core non-housing services
• Longer-term inflation expectations remain well anchored

Economic Outlook: The Fed sees economic growth as solid but slower than in late 2023. Inflation is expected to continue declining toward 2% by 2026 as supply and demand come into better balance. However, risks to employment have increased due to signs of labor market softening, while inflation risks have diminished but remain tilted slightly to the upside.

Market Impact: Markets are pricing in a September rate cut, which could support risk assets like small-cap stocks and boost housing affordability if mortgage rates decline. However, continued restrictive policy and uncertainty around timing may keep borrowing costs elevated for consumers and businesses in the near term.

Source: Fed Minutes PDF

Meeting: FOMC Meeting 2024-06-12

Action: Maintained

Rate: 5.25%-5.50%

Magnitude: No change

Forward Guidance: The Fed signaled it does not expect to cut rates until it gains greater confidence that inflation is sustainably moving toward its 2% target. Future decisions will be data-dependent, with policy adjustments made as needed based on incoming economic information.

Key Factors:

• Inflation has eased over the past year but remains elevated, with only modest further progress toward the 2% target in recent months
• Labor market remains strong, with solid job gains and a low unemployment rate, though some indicators show gradual cooling
• Economic activity continues to expand at a solid pace, consistent with a restrictive policy stance gradually slowing demand
• Risks to achieving both employment and inflation goals have moved into better balance, reducing urgency for immediate rate cuts

Economic Outlook: The Fed sees the economy expanding at a solid pace, with real GDP growth expected to moderate from 2023 levels but remain above trend. The labor market remains strong, though signs of normalization are emerging, including a declining job openings rate and rising unemployment. Inflation is expected to continue trending lower over 2025 and 2026, but progress has been slower than anticipated, and risks remain tilted to the upside.

Market Impact: Markets should expect rates to remain high for the foreseeable future, supporting the dollar and keeping upward pressure on yields for mortgages and business loans. Consumers and businesses should plan for sustained borrowing costs, while investors may see continued volatility until clearer disinflation trends emerge.

Source: Fed Minutes PDF

Meeting: FOMC Meeting 2024-05-01

Action: Maintained

Rate: 5.25%-5.50%

Magnitude: No change

Forward Guidance: The Fed signaled that it does not expect to cut interest rates until it gains greater confidence that inflation is sustainably moving toward its 2% target. Future rate decisions will depend on incoming data, and the Fed remains prepared to adjust policy if risks to inflation or employment emerge.

Key Factors:

• Inflation has eased over the past year but showed a lack of further progress toward the 2% target in recent months, with core services and goods prices surprising to the upside.
• Job gains remained strong and the labor market stayed tight, with solid payroll growth and a low unemployment rate of 3.8%.
• Consumer spending and private domestic final purchases showed continued solid momentum, indicating resilient economic growth.
• Longer-term inflation expectations remain well anchored, but recent readings on short-term inflation expectations have increased.

Economic Outlook: The Fed expects economic growth to remain solid but slow from last year’s pace, with unemployment edging down slightly in 2024 and remaining stable thereafter. Inflation is projected to decline gradually over time but at a slower pace than previously expected, with total and core PCE inflation not reaching 2% until 2026. Risks to inflation are tilted to the upside, while risks to economic activity are skewed to the downside due to persistent inflation and potential financial tightening.

Market Impact: Markets should expect higher-for-longer interest rates, supporting the dollar and putting pressure on rate-sensitive sectors like housing and tech. Businesses and consumers should prepare for sustained borrowing costs, while investors may see continued volatility until clearer signs of disinflation emerge.

Source: Fed Minutes PDF

Meeting: FOMC Meeting 2024-03-20

Action: Maintained

Rate: 5.25%-5.50%

Magnitude: No change

Forward Guidance: The Fed signaled that rate cuts are unlikely until it gains greater confidence that inflation is sustainably moving toward 2%. Policymakers expect to maintain restrictive policy for some time and emphasized a data-dependent approach, with any future adjustments hinging on incoming economic data and inflation trends.

Key Factors:

• Persistent inflation above target, with recent readings firmer than expected
• Strong labor market conditions, including solid job growth and low unemployment
• Solid economic growth in early 2024, though showing signs of slowing
• Elevated risks around inflation and uncertainty about the restrictiveness of financial conditions

Economic Outlook: The Fed sees economic growth continuing at a solid pace but below 2023’s strength, with inflation gradually moving toward 2% over the medium term. Labor market conditions remain tight, though some indicators suggest a better balance between supply and demand. The outlook is uncertain, with risks tilted to both persistent inflation and potential economic slowdown.

Market Impact: Markets should expect higher-for-longer interest rates, supporting the dollar and keeping upward pressure on borrowing costs for consumers and businesses. Equities may remain volatile as investors await clearer signals on rate cuts, while bond yields are likely to stay elevated in the near term.

Source: Fed Minutes PDF

Meeting: FOMC Meeting 2024-01-31

Action: Maintained

Rate: 5.25%-5.50%

Magnitude: No change

Forward Guidance: The Fed signaled that rate cuts are not imminent and will depend on sustained progress toward the 2% inflation target. Officials emphasized they do not expect to reduce rates until they gain greater confidence that inflation is moving sustainably toward 2%.

Key Factors:

• Inflation has eased but remains above the 2% target, with core PCE at 2.9% and total PCE at 2.6% over the past 12 months
• Labor market remains strong but is gradually cooling, with job gains moderating and labor supply improving
• Economic growth was solid in late 2023, driven by strong consumer spending and net exports
• Financial conditions have eased modestly, but credit remains tight for smaller businesses and commercial real estate

Economic Outlook: The Fed views the economy as resilient, with solid growth and a gradually rebalancing labor market. Inflation is moving lower but is still above target, and supply-demand imbalances are improving. The outlook remains uncertain, with risks tilted to both higher inflation and weaker growth, depending on demand resilience and supply-side developments.

Market Impact: Markets should expect rates to stay high for an extended period, supporting yields on savings and fixed income but keeping borrowing costs elevated for consumers and businesses. Equities may face volatility as investors await clearer signals on rate cuts, while the dollar could remain strong.

Source: Fed Minutes PDF

Meeting: FOMC Meeting 2023-12-13

Action: Maintained

Rate: 5.25%-5.50%

Magnitude: No change

Forward Guidance: The Fed signaled that the current rate is likely at or near its peak for this tightening cycle, but left the door open for further hikes if inflation data warrants it. Future decisions will be data-dependent, with policy expected to remain restrictive for some time to ensure inflation sustainably returns to 2%.

Key Factors:

• Inflation has eased over the past year but remains elevated, particularly in core services and housing
• Job gains have moderated but remain strong, with the unemployment rate steady at 3.7%
• Recent data showed slowing GDP growth from a strong third quarter
• Tighter financial conditions and restrictive monetary policy are weighing on demand and inflation

Economic Outlook: The Fed expects real GDP growth to slow notably in the fourth quarter of 2023 and remain below potential over the next two years. The unemployment rate is projected to remain stable through 2026 as labor market imbalances gradually ease. Inflation is expected to continue declining toward 2% by 2026, supported by past policy tightening and better supply-demand balance, though risks remain skewed to the upside.

Market Impact: Markets should expect a pause in rate hikes but not an imminent pivot to cuts. Businesses and consumers will continue to face high borrowing costs, while investors may see continued volatility as the Fed maintains a restrictive stance. Equity markets could remain supported by easing inflation and stable economic conditions, but bond yields may stay elevated until inflation shows sustained progress.

Source: Fed Minutes PDF

Meeting: FOMC Meeting 2023-11-01

Action: Maintained

Rate: 5.25%-5.50%

Magnitude: No change

Forward Guidance: The Fed signaled that it will keep rates at a restrictive level for some time and emphasized a data-dependent approach, with future decisions based on incoming economic information. Further rate hikes could be possible if inflation progress stalls.

Key Factors:

• Elevated inflation remaining above 2% target
• Tight labor market with strong job gains and low unemployment
• Resilient economic growth in Q3 2023
• Significant tightening in financial conditions due to higher long-term yields

Economic Outlook: The Fed sees real GDP growth slowing in the near term but remaining above potential in the second half of the year. Inflation is expected to gradually decline toward 2% by 2026, though risks remain skewed to the upside. The labor market is tight but showing signs of rebalancing, with wage growth moderating but still above levels consistent with 2% inflation.

Market Impact: Businesses and consumers should expect borrowing costs to remain high, with further rate hikes possible if inflation doesn't cool. Financial markets may remain volatile as investors assess the persistence of higher yields and the Fed's 'higher for longer' stance.

Source: Fed Minutes PDF

Meeting: FOMC Meeting 2023-09-20

Action: Maintained

Rate: 5.25%-5.50%

Magnitude: No change

Forward Guidance: The Fed signaled that one more rate hike could be appropriate in the future, but emphasized a data-dependent approach, keeping policy restrictive until inflation sustainably moves toward the 2% target. Communication will now focus more on how long to hold rates at current levels rather than how much higher to go.

Key Factors:

• The economy showed solid and resilient growth in the third quarter
• Labor market remains tight but signs of easing—slower job gains, declining job openings, and rising unemployment slightly to 3.8%
• Inflation remains elevated but is showing signs of slowing, particularly in goods and housing services
• Credit conditions have tightened, which may weigh on future economic activity

Economic Outlook: The Fed sees real GDP expanding at a solid pace, though growth is expected to slow in the coming quarters due to restrictive monetary policy and tighter credit conditions. The labor market remains strong but is gradually rebalancing, with supply and demand coming into better alignment. Inflation is still well above the 2% target, but the Fed expects further progress toward disinflation, assuming no further supply shocks.

Market Impact: Markets should expect rates to remain high for an extended period, supporting stronger dollar and higher yields on bonds. Businesses and consumers will face sustained borrowing costs, which may delay investment and big-ticket purchases. Equities may remain volatile as investors assess the risk of further tightening versus economic resilience.

Source: Fed Minutes PDF

Meeting: FOMC Meeting 2023-07-26

Action: Raised

Rate: 5.25%-5.50%

Magnitude: 0.25 percentage points

Forward Guidance: The Fed signaled that future rate decisions will depend on incoming data, with no commitment to further hikes. Officials emphasized they are prepared to adjust policy if risks emerge, but will remain restrictive until inflation sustainably moves toward 2%.

Key Factors:

• Inflation remains elevated, though showing signs of moderating
• Strong labor market with robust job gains and low unemployment
• Tighter credit conditions weighing on economic activity
• Resilient economic growth despite previous rate hikes

Economic Outlook: The Fed sees economic activity expanding at a moderate pace, with inflation still well above its 2% target. While labor market conditions are gradually improving, with some signs of easing demand and supply balance, inflation needs further cooling. The staff expects real GDP growth to slow in 2024 and 2025, with inflation reaching 2.2%–2.3% by 2025.

Market Impact: Higher rates will increase borrowing costs for businesses and consumers, particularly for loans and mortgages. Financial markets may see continued volatility as investors assess whether this is the last hike in the cycle, with potential relief if inflation continues to ease.

Source: Fed Minutes PDF

Meeting: FOMC Meeting 2023-06-14

Action: Maintained

Rate: 5.00%-5.25%

Magnitude: No change

Forward Guidance: The Fed signaled that additional rate hikes in 2023 could be appropriate, as inflation remains well above target and the labor market is still tight. Holding rates steady at this meeting allows the Committee more time to assess incoming data before deciding on further tightening.

Key Factors:

• Inflation remains elevated, particularly core inflation, which has shown few signs of sustained easing
• Robust job gains and a tight labor market, with the unemployment rate at 3.7 percent
• Recent banking sector stress has led to tighter credit conditions, which may weigh on economic activity
• Economic growth has been modest but resilient, stronger than earlier expected

Economic Outlook: The Fed sees economic activity expanding at a modest pace, with inflation still well above the 2% goal. Labor market conditions remain tight, though some signs suggest supply and demand are gradually balancing. The staff projects a mild recession later in the year, but recent data has increased uncertainty around that outlook, with risks to inflation judged as tilted to the upside.

Market Impact: Markets should expect a data-dependent path forward, with potential for further rate hikes if inflation does not cool. Businesses and consumers will continue to face high borrowing costs, while investors should remain prepared for volatility as the Fed balances inflation control against growth risks.

Source: Fed Minutes PDF

Meeting: FOMC Meeting 2023-05-03

Action: Raised

Rate: 5.00%-5.25%

Magnitude: 0.25 percentage points

Forward Guidance: The Fed signaled that future rate decisions will be data-dependent, with no commitment to further hikes or cuts. Officials emphasized they will closely monitor incoming economic data and are prepared to adjust policy if risks to inflation or employment emerge.

Key Factors:

• Persistent inflation well above the 2% target
• Tight labor market with robust job gains and low unemployment
• Banking sector stress leading to tighter credit conditions
• Slower-than-expected progress in bringing down core inflation

Economic Outlook: The Fed expects real GDP growth to slow below its long-run trend in 2023 due to restrictive financial conditions and tighter credit. The labor market is still very tight, but signs of softening are emerging, including declining job openings and quits. Inflation remains elevated, with core inflation showing only gradual improvement, and risks to inflation are still tilted to the upside.

Market Impact: Higher borrowing costs will continue to pressure consumer loans, mortgages, and business investment. Financial markets should expect volatility as the Fed takes a wait-and-see approach, with future moves dependent on incoming data—potentially keeping rates higher for longer.

Source: Fed Minutes PDF

Meeting: FOMC Meeting 2023-03-22

Action: Raised

Rate: 4.75%-5.00%

Magnitude: 0.25 percentage points

Forward Guidance: The Fed signaled that 'some additional policy firming may be appropriate' to achieve a sufficiently restrictive stance to bring inflation down to 2%. However, it emphasized it would closely monitor incoming data, especially the effects of tighter credit conditions from recent banking sector stress.

Key Factors:

• Inflation remains elevated, with core PCE at 4.7% and little progress on disinflation in services prices
• Strong labor market with robust job gains and unemployment at 3.6%
• Recent banking sector turmoil (e.g., Silicon Valley Bank, Signature Bank) is likely to tighten credit conditions
• Earlier economic data were stronger than expected, supporting a case for further rate hikes

Economic Outlook: The Fed acknowledged a 'modest' pace of economic growth but sees risks tilted to the downside due to likely tighter credit conditions from bank stress. The labor market remains very tight, but participants expect below-trend GDP growth to be needed to rebalance supply and demand. Inflation is still far above the 2% target, and progress on disinflation has been slower than hoped.

Market Impact: Markets should expect further rate hikes unless banking stress significantly slows the economy. Businesses and consumers will face higher borrowing costs, while investors should prepare for continued volatility as the Fed balances inflation control with financial stability risks.

Source: Fed Minutes PDF

Meeting: FOMC Meeting 2023-02-01

Action: Raised

Rate: 4.50%-4.75%

Magnitude: 0.25 percentage points

Forward Guidance: The Fed signaled that ongoing rate increases will likely be needed to achieve a sufficiently restrictive policy stance to bring inflation back to 2%. Future decisions will depend on incoming data, with the Committee closely monitoring economic and financial developments.

Key Factors:

• Inflation remains elevated, though it has eased somewhat in recent months
• Labor market conditions are still very tight, with robust job gains and a low unemployment rate
• Recent data show modest growth in spending and production
• Financial conditions have eased somewhat in recent months, which could necessitate further tightening

Economic Outlook: The Fed sees economic growth slowing further in 2023, with real GDP growth below its longer-run trend. While inflation has moderated, it remains well above the 2% target. The labor market remains strong, but participants expect demand to weaken over time, helping bring supply and demand into better balance.

Market Impact: Higher borrowing costs will continue to weigh on interest-sensitive sectors like housing and business investment. Investors should expect further rate hikes, supporting the dollar and bond yields, while equity markets may face volatility as the economy slows toward a potential soft landing or mild recession.

Source: Fed Minutes PDF

Meeting: FOMC Meeting 2022-12-14

Action: Raised

Rate: 4.25%-4.50%

Magnitude: 0.25 percentage points

Forward Guidance: The Fed signaled that ongoing rate increases will be appropriate to achieve a sufficiently restrictive policy stance to bring inflation back to 2%. Future decisions will depend on incoming data, the cumulative effects of past hikes, and economic and financial developments.

Key Factors:

• Inflation remained elevated but showed signs of moderating, with October and November CPI data showing slower price increases
• Strong labor market with robust job gains, low unemployment (3.7%), and elevated wage growth
• Slowing economic growth, particularly in interest-sensitive sectors like housing, due to prior rate hikes
• Financial conditions eased recently due to lower inflation expectations and declining long-term yields

Economic Outlook: The Fed expects economic growth to slow significantly in 2023 to below trend, with inflation remaining unacceptably high but gradually declining. A sustained period of below-trend growth will be needed to bring inflation down. The unemployment rate is expected to rise modestly, especially among demographic groups like African Americans and Hispanics, as labor market imbalances slowly resolve.

Market Impact: Higher borrowing costs will continue to pressure businesses, homebuyers, and consumers, particularly through elevated mortgage and credit card rates. Financial markets may face volatility as investors assess the risk of over-tightening, but the Fed’s commitment to fighting inflation supports long-term confidence in price stability.

Source: Fed Minutes PDF

Meeting: FOMC Meeting 2022-11-02

Action: Raised

Rate: 3.75%-4.00%

Magnitude: 0.75 percentage points

Forward Guidance: The Fed signaled that ongoing rate hikes will be necessary to achieve a sufficiently restrictive policy stance to bring inflation back to 2%. However, it indicated that a slower pace of increases will likely be appropriate soon to assess the impact of cumulative tightening.

Key Factors:

• Inflation remained stubbornly high, with core PCE at 5.1% and no clear signs of sustained moderation
• The labor market was extremely tight, with unemployment at 3.5% and elevated wage growth
• Financial conditions had tightened significantly, especially in interest-rate-sensitive sectors like housing
• Global factors including Russia’s war in Ukraine and China’s economic slowdown were adding upward pressure on inflation and weighing on growth

Economic Outlook: The Fed expects below-trend economic growth in the near term, with real GDP likely to slow further. Inflation is projected to decline gradually over the next two years but remains well above the 2% target. The unemployment rate is expected to rise modestly from its current low level as labor market imbalances slowly ease.

Market Impact: Higher borrowing costs will continue to pressure businesses, homebuyers, and consumers, particularly in sectors like housing and auto loans. Financial markets should expect further volatility as the Fed moves toward a restrictive policy stance, though the pace of hikes may slow in coming months.

Source: Fed Minutes PDF

Meeting: FOMC Meeting 2022-09-21

Action: Raised

Rate: 3.00%-3.25%

Magnitude: 0.75 percentage points

Forward Guidance: The Fed signaled that ongoing increases in the federal funds rate will be appropriate to combat high inflation, with future moves dependent on incoming economic data. They emphasized a commitment to maintaining a restrictive policy stance until there is clear evidence inflation is returning to the 2% target.

Key Factors:

• Inflation remained unacceptably high, with both headline and core PCE inflation well above the 2% target
• Strong labor market conditions, including robust job gains and low unemployment, were sustaining upward pressure on wages and prices
• Supply and demand imbalances, including persistent supply chain disruptions and labor shortages, continued to fuel inflation
• Global risks such as the war in Ukraine, slowing growth in China, and tighter monetary policy abroad were weighing on the outlook

Economic Outlook: The Fed expects U.S. economic growth to be modest in the second half of 2022 and below trend in coming years as tighter monetary policy takes effect. The labor market remains very tight, but participants anticipate it will gradually soften, with the unemployment rate likely rising. Inflation is expected to decline slowly over the next few years but remains a top concern, with risks skewed to the upside.

Market Impact: Higher borrowing costs will continue to pressure businesses, homebuyers, and consumers, particularly in interest-sensitive sectors like housing and autos. Financial markets will likely remain volatile as investors assess the pace of future rate hikes and the risk of an economic slowdown or recession.

Source: Fed Minutes PDF

Meeting: FOMC Meeting 2022-07-27

Action: Raised

Rate: 2.25%-2.50%

Magnitude: 0.75 percentage points

Forward Guidance: The Fed signaled that ongoing increases in the federal funds rate will be appropriate to combat high inflation, with future moves dependent on incoming economic data. It emphasized a commitment to returning inflation to its 2% target and indicated that a restrictive policy stance is likely needed in the near term.

Key Factors:

• Inflation remained elevated, with broad-based price pressures and a recent surge in food prices
• Strong labor market with robust job gains and low unemployment, though signs of softening were emerging
• Slowing economic activity, with weaker spending and production data in the second quarter
• Global risks including Russia’s war against Ukraine and supply chain disruptions continuing to weigh on the outlook

Economic Outlook: The Fed expects economic growth to continue in the second half of the year but at a below-trend pace. Inflation is projected to remain high in the near term, with core PCE inflation expected to decline gradually toward 2% by 2024. The unemployment rate is forecast to rise modestly through 2023 as labor market imbalances ease.

Market Impact: Higher borrowing costs will continue to pressure businesses and consumers, particularly in interest-sensitive sectors like housing and durable goods. Financial markets may face volatility as investors adjust to the prospect of further rate hikes and a restrictive monetary policy stance.

Source: Fed Minutes PDF

Meeting: FOMC Meeting 2022-06-15

Action: Raised

Rate: 1.50%-1.75%

Magnitude: 0.75 percentage points

Forward Guidance: The Fed signaled that ongoing increases in the federal funds rate will be appropriate to combat high inflation, and it remains highly attentive to inflation risks. The pace of future rate hikes will depend on incoming economic data, with a willingness to adjust policy if risks emerge that could impede its goals.

Key Factors:

• Elevated inflation well above the 2% target, with PCE inflation at 6.3% and CPI at 8.6%
• Tight labor market with strong job gains and low unemployment (3.6%)
• Supply chain disruptions exacerbated by China's lockdowns and the war in Ukraine
• Rising energy and food prices adding to inflationary pressures

Economic Outlook: The Fed expects inflation to remain high in 2022 but gradually decline toward 2% by 2024 as supply-demand imbalances ease and tighter monetary policy restrains demand. Economic growth is projected to slow in the second half of 2022 and into 2023 due to tighter financial conditions, though real GDP remains above potential. The labor market is expected to stay tight but gradually rebalance, with the unemployment rate rising modestly to 4.1% by 2024.

Market Impact: Higher borrowing costs will weigh on consumer spending, housing activity, and business investment, particularly for rate-sensitive sectors. Financial markets will likely remain volatile as investors adjust to a faster pace of tightening and the Fed's shift to a restrictive policy stance.

Source: Fed Minutes PDF