Fed Holds Rates Steady for Now
But more dots move toward a rate hike--or hikes--in 2022 or 2023.
In its latest statement March 17, the Federal Open Market Committee unsurprisingly held the federal-funds rate at 0.0%-0.25%. This wasn’t where the excitement was, as nobody expected a change in rates. Instead, the focus was on the release of new economic projections, as well as any hints of a change in the verbiage of the release related to what is now expected to be a strong recovery that might also push inflation higher. Based on our read of the Federal Reserve's most recent statements, we don’t plan to make any changes to our current rate forecasts in our U.S. bank models.
It’s easy at times to get lost in the minutiae--Did the Fed shift its rate forecast in 2023 by 25 basis points? Did inflation expectations shift by 10 basis points? Was there a word change in the release?--but we would emphasize three key points we gleaned from the Fed's recent statement.
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