June 2022 – By Kyle Rohrwasser

Last month, Federal Reserve Chair Jerome Powell put any mention of a 75 basis point hike to bed, implying that they would not move too quickly.  However, after the June 10^th inflation report came in higher than expected (8.6%), the idea of a 50-point hike seemed like nowhere near enough. In a sign that the Fed is serious about fighting inflation, and willing to pivot quickly as the economic data changes, the Federal Reserve hiked the Federal Funds rate 75-basis points (0.75%). In addition, they also updated their estimates projecting a year-end Federal Funds rate of 3.4%, substantially higher than initial projections of 1.9% made in March.

June 2022 – Scott Rosenquist, CFA®

The consumer price index (CPI) for the month of May came in higher than expected. The headline number was up 8.6% over the last year showing the largest increase in decades as price increases were broad based with gas, food and shelter contributing the most. Investors were looking for signs of inflation peaking but will have to remain patient as economic conditions continue to tighten. The Federal Reserve has signaled several interest rate increases over the coming months while also starting to reduce the size of their balance sheet. This process will take time to filter through the economy although the market has anticipated this and reflected across several financial asset classes. The Federal Reserve meets this week and investors are looking to see if they act more aggressively than previously signaled to combat rising prices.