By Tom Burnett CFA
On May 3, 2023, the Federal Reserve Open Market Committee (“OMC”) decided to raise the Fed Funds rate to a range of 5-5.25% to continue its effort to bring down inflation. The decision was unanimous among all 12 voting members. In its press release, the FOMC stressed that it is ‘strongly committed to returning inflation to its 2 percent objective.” In addition, the Fed will continue to reduce its balance sheet by not rolling over $60 billion per month of Treasury holdings and $35 billion a month of mortgage-backed securities.
The markets were not surprised as the rate on the Ten-year Treasury remained at 3. 4% following the Fed’s announcement.
The next FOMC meeting will be concluded on June 14, 2023.
Tom Burnett CFA is Director of Research