US Fed still focused on inflation, but eventually rate hikes can slow

As expected, the FOMC delivered its second consecutive 75bps rate hike, lifting the target range for the federal funds rate to 2.25% to 2.50%. Despite softening in some sectors of the economy, the Fed remains focused on bringing inflation back to its 2% target, and Fed Chair Powell said that some slowing in growth and easing in labor market conditions will be necessary to achieve that goal.

What you will learn:

• The Fed expects to continue raising rates, and Powell wouldn’t rule out another 75bps rate hike at the September meeting.
• However, given the amount of tightening already in the pipeline, Powell signaled that at some point the pace of rate hikes can slow down.
• The Fed doesn’t think the economy is currently in a recession and Powell still thinks the Fed can engineer a soft landing, citing still-tight labor market conditions and strong balance sheets for most households.