SPY - Fed Meeting Today: 10 Takeaways From March FOMC Meeting & Statement
2023-03-22 13:59:54 ET
The second Fed meeting is today, meaning the markets are embattled in a tug-o-war between bulls and bears. Whether you’re trading penny stocks , which we discuss frequently, or higher-priced company stocks, what is decided today by the Federal Reserve could set a tone for the remainder of the quarter. Inflation is a core concern for many who’ve hoped that the FOMC monetary policy decisions are helped make headway toward a soft landing. While there isn’t a chance (for now) of a no-landing scenario, investors remain skittish ahead of this next rate decision in the stock market today.
With muted CPI data from February and cooler PPI data from the same period, the assumptions have been for the Fed to either pause hiking rates or raise them by 25 basis points. The Committee decided to raise the target range for the federal funds rate to 4-1/2 to 4-3/4 percent, 25 basis points in the last meeting. They also reaffirmed the judgment that inflation at 2% is “most consistent over the longer run with the Federal Reserve’s statutory mandate.”
Furthermore, Federal Reserve Chairman Jerome Powell explained that ongoing increases would appropriately tackle inflation. He said there are plans to “significantly” reduce the Fed’s balance sheet size and focus strongly on the jobs market. Powell explained in the January/February FOMC meeting press conference that job gains remain “robust” and that the labor force participation rate changed “little” from a year ago.
In addition, Powell was also asked what data is “substantially more evidence” that policy decisions are working. He explained, “As evidence comes in, it will be reflected in policy over time. It is our job to restore price stability for the American public.”
March 2023 Fed Meeting Statement & Rate Hike Announcement
Heading into the Fed Meeting today and FOMC statement for the March Fed meeting, the market is leaning toward a 25 basis point hike. However, a look at the last round of Fed minutes from February shows that some members wouldn’t be upset with a 50 basis point raise:
“A few participants stated that they favored raising the target range for the federal funds rate by 50 basis points at this meeting or that they could have supported raising the target by that amount. The participants favoring a 50-basis point increase noted that a larger increase would more quickly bring the target range close to the levels they believed would achieve a sufficiently restrictive stance, taking into account their views of the risks to achieving price stability in a timely way.”
Right now, the wild card is the recent banking crisis that saw Credit Suisse ( NYSE: CS ) get purchased and left regional banks on the naughty list for big money. First Republic Bank ( NYSE: FRC ), specifically, was the one making headlines this week. Alecta, Sweden’s largest pension fund, was reported to have sold all its shares in the ailing U.S. lender at a loss of $728 million. Whether or not this continues promoting concerns from policymakers is something yet to be seen.
March 2023 Fed Meeting, FOMC Statement, & Interest Rate Hike Top 10 Takeaways
This is a developing story and will be updated as new data emerges.