2023-04-12 12:15:00 ET
LIVE COVERAGEThe Fed now has the stage in the stock market today following a lighter-than-expected March CPI report on Wednesday. Whether you’re trading penny stocks or high-priced blue chip stocks, knowing how to use data is a great way to capitalize on the recent stock market volatility.
In March, inflation experienced a slowdown as the Federal Reserve’s interest rate hikes appeared to have begun to take effect. The consumer price index (CPI), a commonly used gauge of the prices of goods and services in the U.S. economy, saw a 0.1% increase for the month. That is compared to the market’s prediction of 0.2%. The year-over-year increase was 5%, also slightly below the anticipated 5.1%.
When excluding food and energy, the core CPI rose by 0.4% month-over-month and 5.6% annually, both in line with expectations. This has brought more optimism back to stocks. However, the early exuberance in the stock market today has subsided. Now, investors are gearing up for the next round of Fed meeting minutes from last month.
Certainly, the March inflation report will likely be weighed more heavily against the prospects of a May interest rate hike. It’s also worth accounting for the recent jobs report and unemployment rate data.
Nevertheless, a lot has changed since the Fed’s last meeting with investors, effectively putting the banking crisis in the rearview as earnings season begins this week.
What Happened At The March Fed Meeting?
Here’s a recap of the top takeaways from the FOMC meeting in March:
- 25 Basis Point rate hike: The Committee raised the target range for the federal funds rate to 4-3/4 to 5%.
- Recent indicators point to modest growth in spending and production. Job gains have picked up in recent months and are running at a robust pace; the unemployment rate has remained low. Inflation remains elevated.
- The Committee seeks to achieve maximum employment and inflation at the rate of 2% over the longer run
- The Committee anticipates that some additional policy firming may be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2% over time.
- In addition, 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.
- The 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.
- In determining the extent of future increases in the target range, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.
- Allow modest deviations from stated amounts for reinvestments, if needed for operational reasons.
- Reinvest into agency mortgage-backed securities (MBS) the number 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.
Commentary From Fed Chair Powell
The Fed’s use of the term “firming” to explain anticipated policy measures was something new that caught attention. Chairman Jerome Powell also stayed true to his stance on policy decisions. They will be data-dependent, and inflation persists at levels that are “well above” the 2% goal. Furthermore, Powell explained that the “Fed expects slow growth and supply/demand rebalance with inflation moving down. Participants do not see rate cuts this year.”
The FOMC’s statement also reassured the public about the financial system. This followed the collapse of Silicon Valley Bank and the bank runs that ensued shortly after. “The U.S. banking system is sound and resilient. Recent developments are likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring, and inflation. The extent of these effects is uncertain. The Committee remains highly attentive to inflation risks.”
Frequently Asked Questions (FAQ) About The Federal Open Market Committee Meeting Minutes
Question: When Are The Fed Minutes Released?
Answer: Fed Meeting Minutes are released three weeks after each FOMC meeting.
Question: What Are The Federal Open Market Committee Meeting Minutes?
Answer: According to the Federal Open Market Committee, the Fed meeting minutes “provide a timely summary of the discussion during the meeting and the decisions taken at the meeting. The minutes describe the views of policymakers and explain the reasons for the Committee’s findings.
The minutes can help the public interpret economic and financial developments and understand the Committee’s decisions. As an official record of the meeting, the minutes identify all attendees and provide a complete record of policy actions taken, including the votes by individual members on each policy action.”
FOMC Meeting Minutes for March 2023
This is a developing story. The March FOMC Meeting minutes will come out at 2 PM ET. We will update you as new details come out.