Originally Published: February 1, 2023 2:00 PM ET
The first Federal Reserve meeting of 2023 and the debut FOMC statement of the year is here. Jerome Powell’s statements are something investors will focus on for clues as to what’s in store for inflation, rate hikes, and, of course, the Fed funds target.
Whether it’s a more hawkish speech or if Jerome Powell is surprisingly dovish, this likely sets the tone for sentiment in the first quarter. Further details could also dictate how the market approaches risk-on assets like penny stocks .
January/February 2023 Fed Rate Hike Announcement
Heading into the Fed Meeting and FOMC statement from the January 31st to February 1st meeting, the market is expecting a 25 basis point hike. Stronger employment data and “better than bad” earnings have swayed speculation in the stock market. There has been plenty of volatility as a result, with the broader markets chopping during the Wednesday morning session. No matter what the rate increase is – 25 bps or 50 bps – the attention will likely be on what happens to the Fed Funds target rate.
January/February 2023 Fed Meeting, FOMC Statement, & Interest Rate Hike Top 10 Takeaways
- 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.
- The Committee reaffirms its judgment that inflation at the rate of 2 percent, as measured by the annual change in the price index for personal consumption expenditures, is most consistent over the longer run with the Federal Reserve’s statutory mandate.
- The longer-term inflation expectations that are well anchored at 2 percent foster price stability and moderate long-term interest rates and enhance the Committee’s ability to promote maximum employment in the face of significant economic disturbances.
- Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals.
- The Committee anticipates that ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time.
- The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in its previously announced plans.
- Conduct overnight reverse repurchase agreement operations at an offering rate of 4.55 percent and with a per-counterparty limit of $160 billion per day; the per counterparty limit can be temporarily increased at the discretion of the Chair.
- Roll over at auction the amount of principal payments from the Federal Reserve’s holdings of Treasury securities maturing in each calendar month that exceeds a cap of $60 billion per month. Redeem Treasury coupon securities up to this monthly cap and Treasury bills to the extent that coupon principal payments are less than the monthly cap.
- Reinvest into agency mortgage-backed securities (MBS) the amount of principal payments from the Federal Reserve’s holdings of agency debt and agency MBS received in each calendar month that exceeds a cap of $35 billion per month.
- Engage in dollar roll and coupon swap transactions as necessary to facilitate settlement of the Federal Reserve’s agency MBS transactions.
Fed Chair Jerome Powell’s FOMC Press Conference Highlights
We will discuss specific commentary from the first Fed Meeting Press Conference of 2023 hosted by Fed Chair Jerome Powell, which begins at 2:30 PM ET. A link to the Video version of that press conference is provided above.