Executive Summary of Today’s FOMC Announcement
- As expected, no change to the overnight rate or Quantitative Easing Programs
- The Fed continues to project their next rate hike for 2023
- The central bankers specifically remind the market that they will be content to let inflation run above 2% for sometime in order to allow for full employment
- Upgraded forecasts: YoY GDP growth to 6.5% by Q4 before slowing to 3.3% next year and 2.2% in 2023. Unemployment forecasted to hit 3.9% by end of 2022
- Short-end rates, less than 5y, should remain well anchored, with the Fed in no rush to hike.
- Long-end rates, greater than 5y, expected to drift higher but at a slower pace than the past few months. Instead, we expect a slow grind higher based on good data point (job numbers) over the next several months.