Can the FOMC agenda summary elucidate the confusion caused by the deferment and additional interest rate hike predictions?

moomooニュース米国株 wrote a column · Jul 5, 2023 09:28

The US financial authorities will announce the summary of the proceedings of the Federal Open Market Committee (FOMC) meeting held on 6/13 and 14 on the afternoon of the 5th (before dawn on the 6th Japan time). The US Federal Reserve (Fed) did not raise interest rates at the June policy meeting, but it caused confusion in the market. The discussion behind this will be clarified in the minutes to be published on the 5th.

After raising interest rates 10 times in 15 months, the Federal Reserve suspended interest rate hikes against the backdrop of inflation slowing more slowly than expected. Meanwhile, the interest rate forecast distribution chart (dot plot) showed the forecast that two more interest rate hikes are expected this year. Confusion has spread among investors, and they are seeking clear explanations.

Chairman Powell said he would like to analyze economic data more carefully in order to determine the impact of past interest rate hikes and the credit crunch associated with bank failures in March. Last week, the majority of the committee anticipated two or more rate hikes, and it was also pointed out that interest rate hikes at consecutive meetings would not be ruled out.

LH Mayer/Monetary Policy Analytics economist Derek Tan said, “If interest rates are not raised for 2 consecutive meetings, it will be difficult to argue that the interest rate hike cycle is still going on, so the July interest rate hike is not the default route, but it is very close to that,” and pointed out in the summary of the proceedings that there is a possibility that market observations surrounding the July interest rate hike will be strengthened.

According to the Chicago Mercantile Exchange (CME) “FedWatch Tool,” the forecast probability that policy interest rates will be raised to 5.25 to 5.50% by the FOMC in July was 86.2%.