MNI Fed Review - July 2023: September’s Open

• The Fed’s July meeting emphasized a data-dependent, meeting-by meeting approach to future decisions.
• While the Statement retained the FOMC’s tightening bias and Chair Powell’s comments underscored the optionality to either hike again or hold in September, market implied rate expectations leaned slightly lower as the press conference was seen to lean dovish (or at least, not as hawkish as feared).
• There were several dovish-leaning elements to Powell’s commentary: he said current policy rates were restrictive, that past tightening and worsening credit conditions were yet to fully impact the economy, and hinted that some on the FOMC wanted to hold rates at this meeting.
• On the more hawkish side, he reiterated the "higher for longer" theme and sent a signal that the FOMC wouldn’t consider rate cuts until late 2024. ·
• No analysts changed their views on future Fed policy following this meeting, with a minority continuing to see one further hike in either Sept or Nov and most seeing cuts starting in late Q1/early Q2 2024.

FOR FULL ANALYSIS INCLUDING 27 SELL SIDE SUMMARIES:

FedReviewJuly2023.pdf