For some Federal Open Market Committee (FOMC) meetings, the result seems obvious ahead of time to just about everyone. This was one of them. When the result is obvious, the market shouldn’t react much because there’s little room for a surprise to push prices around. But this time, the market did react. Why? It’s simple: The FOMC is splintering into factions, and that makes the outcomes from future meetings much less obvious.
Surprising no one, the Federal Open Market Committee (FOMC) voted to hike its policy rate by 75 basis points (bps; 100 bps equal 1.00%) to a range of 3.75% to 4.00%.
The old saying is that “talk is cheap.” It certainly isn’t if you’re a central banker. Investors hang on a central banker’s every word. Whether the Federal Reserve (Fed) hikes by 75 basis points (bps; 100 bps equal 1.00%) or 50 bps is probably less relevant than what Fed officials say with their Summary of Economic Projections (their guesses about what they’ll do in the future and how the economy may evolve).
The Federal Open Market Committee (FOMC) hiked its federal funds rate target by 0.75% at its July meeting, as expected.
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