Maintain stability was the directive as the FOMC implemented another 25 basis points rate increase on Wednesday, marking a 22-year high as foreseen. Federal Reserve Chair Powell adhered to his prior statements during the subsequent press briefing without deviating from the established path. Despite the current market sentiment indicating a pause in further rate hikes, Powell underscored the persistently high core inflation, underscoring the Fed’s steadfast dedication to its 2% target.
The central theme communicated was the Fed’s reliance on data. Thursday morning brought forth a flurry of economic indicators, all highlighting the resilience of the U.S. economy. GDP, Durable Goods Orders, and Pending Home Sales all outperformed expectations, signifying consumer willingness to spend. Concurrently, the labor market maintained its robustness, with Initial Jobless Claims exhibiting softer figures than anticipated. Powell’s emphasis on data dependence and the robust data released within a day sparks speculation about whether the Fed might diverge from market consensus and contemplate another rate increase in the upcoming fall period.