*FED HOLDS BENCHMARK RATE IN 5%-5.25% TARGET RANGE
*FED MEDIAN RATE FORECASTS RISE TO 5.6% END-`23, 4.6% END-`24
*FED SAYS `EXTENT OF ADDITIONAL’ FIRMING TO HINGE ON ECONOMY
*FED SAYS HOLDING RATES ALLOWS FOMC TO ASSESS ADDITIONAL DATA
*FED SAYS FOMC VOTE WAS UNANIMOUS
*FED SWAPS NO LONGER CONSIDER 2023 RATE CUT LIKELY
As expected, Fed leaves rates unchanged, while talking up the probability of multiple future rate hikes going forward, delivering a ‘hawkish pause’. The Fed’s dot plot is now showing a terminal interest rate of 5.6% by the end of 2023 – essentially two more 25bps rate hikes, with the first coming next month and the final one slated for September. Half of the voting members see two more hikes, while other officials see 3-4 more rate hikes; rate cuts have essentially been taken off the table for this year. Definitely a much sturdier prescription on our economy since the March bank failures than expected in response to recent growth and strength in the job market. Rates are higher post-Fed and equity markets are trading off hard.
Commentary by: Jeremy Collett, EVP, Head of Capital Markets
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