Fed Delivers 0.75% Rate Hike

Fed hikes rates by 0.75%, Powell comments received as dovish. The FOMC followed through on market expectations and hiked rates by 0.75% to a 2.25%-2.50% range. But it was Fed Chair Jerome Powell’s press conference that ultimately moved markets, specifically Powell’s comments that it would be “appropriate” to slow the pace of rate hikes. That acknowledgment led to a sharp rally across a steepening yield curve, the 10-year Treasury yield ending the day at 2.78% while the front end of the curve shifted lower.

“Dovish” Powell reaffirms commitment to fighting inflation. The Fed Chair’s comments around future rate hikes were generally perceived as dovish by the market, but Powell also reaffirmed the Fed’s commitment to fighting inflation. In his words, “price stability is what makes the whole economy work.” The Fed leader also noted that the central bank would be data-dependent as it evaluates future rate changes, saying that the Fed “won’t hesitate” to hike rates by an even larger amount if the data suggests it’s necessary.

Day ahead. Kicking off the day will be the first look at GDP for the second quarter, along with initial and jobless claims. No Fed officials are expected to make public comments.