Powell star wars meme may 4th
  • Decision was unanimous
  • Band is now from 0.75% to 1.00%
  • At the previous meeting, the Fed hiked by 25 bps to 0.25-0.50%
  • No mention of anything indicating a faster or 'expiditious' pace of tightening, as speculated by some
  • At last look the Fed funds market is priced at 90.5% for a 50 bps hike and a 9.5% chance of 75 bps
  • Although overall economic activity edged down in the first quarter, household spending and business fixed investment remained strong
  • Added the line: "The Committee is highly attentive to inflation risks."
  • Job gains now described as 'robust' vs 'strong' previously
  • Balance sheet runoff will begin on June 1
  • Balance sheet runoff caps of 60B for Treasuries vs 60B expected
  • Balance sheet runoff caps of 35B for MBS vs 35B expected
  • Balance sheet runoff phased in over 3 months vs 3 months expected

There was some speculation the Fed could include the line that Powell used -- 'expeditious' -- in his recent comments but that's not included. The decision was also unanimous. Both those are slightly dovish surprises and that's why the dollar is lower immediately.

Fed Chair Jerome Powell will host a press conference at the bottom of the hour. We will look for commentary on inflation and the likelihood of a 50 or 75 bps hike at the next meeting.

The Fed funds futures market puts a 50 bps hike at the June 15 meeting now at 77% vs 56% previously. Odds of a 75 bps hike have fallen.