Summary
United States: Federal Reserve Hikes the Fed Funds Rate by 25 bps
- The FOMC hiked the federal funds rate by 25 bps on Wednesday amid continued strength in the labor market and elevated inflation. However, the Committee noted that recent financial system stresses have created considerable uncertainty in the economic outlook and, by extension, the monetary policy outlook.
- Next week: Cons. Confidence (Tue), GDP & Corp. Profits (Thu), Personal Income & Spending (Fri)
International: Central Bank Bonanza
- The Federal Reserve was not the only central bank assessing monetary policy this week. Central banks across Europe and the emerging markets also met to decide the direction of interest rates. As far as G10 institutions, the Bank of England and Swiss National Bank were in the spotlight. In the emerging markets, focus was dedicated to the Brazilian Central Bank.
- Next week: Central Bank of Colombia (Thu), Central Bank of Mexico (Thu), Eurozone CPI (Fri)
Interest Rate Watch: Fed Tightening: The End is Nigh
- The FOMC’s post-meeting statement and latest projections suggest that recent stress in the financial system has pulled forward the end of the Fed’s tightening cycle. We look for one more 25 bps hike in May before the FOMC holds at 5.00%-5.25% through most of this year.
Credit Market Insights: Consumer Credit Conditions Continue to Tighten
- The latest report from the Federal Reserve Bank of New York’s Survey of Consumer Expectations shows that consumers were already demanding and receiving less credit in February.
Topic of the Week: The Role of Small Banks in U.S. Lending
- Amid turmoil in the financial sector, regional banks have come under pressure. How integral are smaller banks to the broader U.S. economy?
