PREVIOUS TRADING DAY EVENTS 05 July 2023

Yesterday a detailed record of the FOMCs most recent meeting was released. The minutes from the Feds meeting on  June 1314 show that while almost all officials deemed it appropriate or acceptable to keep rates unchanged in a 5 to 5.25 target range, many had supported the idea of an increase instead.  

In that meeting, they agreed to pause interestrate increases but committed to hike again later this month.

It was a little surprising given that the decision was sold as unanimous from Fed officials, said Lindsey Piegza, chief economist at Stifel Nicolaus Co. Its pretty clear that there was a divergence of opinions, with some officials pretty clearly giving some reluctance for a onemonth pause.

Almost all policymakers agreed that more tightening will likely be needed this year.

A strong majority of committee participants expect that it will be appropriate to raise interest rates two or more times by the end of the year, Powell said at a conference in Madrid hosted by the Bank of Spain last week. Inflation pressures continue to run high, and the process of getting inflation back down to 2 has a long way to go.

The U.S. economy shows great resilience with a strong labour market. It is a positive sign that recession could be avoided. However, it raises concerns about how fast the inflation rate will drop, weakening the effects of hikes on inflation.  

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