Fed has entered a new phase of monetary policy. The Fed did not raise its target rate for fed funds and will keep the federal funds’ target at 5.25% where it was set at the May 3, 2023, FOMC meeting. At least till July 26, 2023. This is the first meeting where the Fed has not raised interest rates since the current monetary tightening cycle began last year. The Fed has skipped a June interest rate hike but is prepared to raise rates again in July.
So, there’s no hike, no pause, and no pivot. What we have is a skip. The Fed warned that further rate hikes are still on the table.
The actions played out exactly as we predicted but events get more uncertain from here, if or when further rate hikes will arrive.
Sven Franssen