MNI Fed Review - June 2023: Unconvinced By The Dots

• The June FOMC meeting outcome was more hawkish than expected, with the Dot Plot guiding to a further 50 basis points of rate hikes this year, and Chair Powell clearly signaling that July is “live” for a hike.
• The reaction to the meeting was mixed, with many market participants asking why the Fed didn’t simply raise rates now, if they foresee at least two more hikes this year.
• Market hike pricing didn’t rise significantly, with analysts divided over whether June’s communications were merely a compromise to satisfy hawkish participants opposed to holding rates in June.
• The dovish market reaction in Powell’s press conference underscored how the “actual” current FOMC stance was seen as more nuanced, if not more dovish, than the Dots shock implied.
• In the end the FOMC will probably be satisfied with 2023 rate cuts being further priced out, with a July hike likely but still uncertain.

FULL PDF ANALYSIS HERE