A couple of analyst snippets in response to Wednessday's Federal Open Market Committee (FOMC) and Powell.


  • there are more tightening moves to be realized this cycle
  • still too soon to look for the Fed to shift to an on-hold stance
  • inflation ... eased somewhat, but remains elevated
  • the phrase "pace of future increases" transitioned to "extent of future increases", reinforcing the idea that future rate hikes will be at a pace consistent with what we got today, i.e. 25 bp


  • hawkish messaging (in) the Statement ... ‘ongoing rate increases’ (plural) will be required
  • that while inflation has ‘eased somewhat’ it ‘remains elevated’
  • in the ensuing press conference, Fed chair Powell spoke of the need for the Fed to stay restrictive for ‘some time’
  • substantially more evidence was needed to be confident inflation is on sustained downward path, and that the Fed’s focus is on sustained changes to financial conditions (but which he acknowledged had tightened ‘very significantly’ in the past year)
  • FOMC is talking about a ‘couple more rate hikes’ pre-pause – a message fully consistent with the December FOMC Summary of Economic projections ‘dots’ which show a median 5.0-5.25% 2023 Funds rate (versus a market that continues to see a sub-5% ‘mid-point’ terminal target rate)


  • Fed delivered the highly anticipated quarter point rate hike, and didn't yet opt to signal a pause or give any solace to markets that are pricing-in rate cuts for the second half of the year
  • need for "ongoing increases" in rates ahead, which given the use of the plural term "increases", implies that they still think there's more than one hike to come


  • Powell’s hopefulness must now confront data … the dovish market reaction to Chair Powell’s relatively neutral comments implicitly assumes inflation will continue to cool faster than the Fed expects even absent a further tightening of financial conditions


ICYMI, a rundown of a Big Wednesday:

Fed Powell FEb 1 2023