Key Points

  • The FOMC kept rates unchanged but upgraded its assessment of the economy.

  • Get ready for every FOMC meeting having press conferences.

  • Pace of QT picking up.

In a surprise to no one, the Federal Reserve opted to keep short-term interest rates unchanged at the conclusion of today’s Federal Open Market Committee (FOMC) meeting. There were no dissenting votes among the members. However, the statement did contain a few nuggets worth chewing on.

Bye-bye “for now”

There were a few upgrades to the Fed’s economic forecasts, including a change from “solid” to “strong” when describing economic growth, and calling out the strength in household spending specifically. In addition, the words “for now” were not used when addressing “further gradual increases in the target range for the federal funds rate.” At the June FOMC meeting’s press conference, Fed Chairman Jerome Powell had added “for now” during that part of the discussion.

In general, the review of the statement was that it took a slightly more hawkish tilt, although chances of a September rate hike remained steady at about 80% according to Bloomberg. The initial reaction by U.S. stocks was a retreat and Treasury yields held mostly steady.

Bye-bye presser

This week’s meeting was the next-to-last FOMC meeting without a subsequent press conference. Under the direction of Fed Chairman Jerome Powell a decision was made recently to have a “presser” following every meeting, which begins next year. As a result, gone will be the days when investors could assume that the meetings occurring in between those with pressers would be free from worry about a rate hike. In other words, all eight annual meetings should be considered “live” next year and beyond; and therefore represent possible sources of market volatility.