The Federal Reserve Open Market Committee raised its target for overnight interest rates by 0.25% to a range of 4.50–4.75%, the eighth consecutive meeting at which it raised rates for a total of 4.50% of tightening.
  • The Federal Reserve raised its target for overnight interest rates by 0.25% to a range of 4.50–4.75%, the smallest hike since March 2022
  • Today’s increase will probably be followed by a pause in March, contingent on two CPI reports confirming slowing price pressures
  • There seems to be a singular obsession—misguided in our view—about how financial conditions transmit into real economic activity
  • FOMC statement retained the expectation of further rate hikes, but did acknowledge early signs of slowing inflation pressures

We find it likely that, pending cooperation from two months of jobs and CPI data scheduled for release before the next FOMC meeting, the Fed will follow today’s hike with a pause in the tightening cycle—policymakers just aren’t allowed to say it yet.

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About the author

Guy LeBas

Director, Custom Fixed Income Solutions

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