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FOMC Press Release

Economic activity expanded at a modest pace in the first quarter. Job gains have been robust in recent months, and the unemployment rate has remained low. Inflation remains elevated.

The U.S. banking system is sound and resilient. Tighter credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation. The extent of these effects remains uncertain. The Committee remains highly attentive to inflation risks.

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals, the Committee decided to raise the target range for the federal funds rate to 5 to 5-1/4 percent. The Committee will closely monitor incoming information and assess the implications for monetary policy. In determining the extent to which additional policy firming may be appropriate to return inflation to 2 percent over time, 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. 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 is strongly committed to returning inflation to its 2 percent objective.

In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. 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. The Committee’s assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.

Six Key Points

• Inflation is elevated
• Banking system is sound and resilient
• Tighter credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation.
• The Committee will take into account lags from rate hikes
• Quantitative Tighten (QT), balance sheet reduction of treasuries and mortgage backed securities will continue
• The Committee is strongly committed to returning inflation to its 2 percent objective

Tenth Straight Hike and a Potential Pause

This meeting marked the tenth straight rate hike. The market expects the Fed will now pause. 

Notably, the Fed dropped the phrase that additional policy increases might be appropriate.

There is no dot plot or projection materials of expected hikes or economic activity.

A press conference starts at 2:30 Eastern.  

April Fed Minutes Predict a Recession This Year Along With Higher Unemployment

In the minutes of the April meeting The Fed Forecast a Recession. 

That question will likely come up at today's press conference.

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