Fed September Meeting: The Job's Not Done

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Summary

  • The U.S. Federal Reserve delivered its third straight 75-bps rate hike on Wednesday.
  • Based on the Fed's updated economic projections, the growth outlook is for a weaker economy over its projection horizon versus its June update.
  • We know policy works with a lag, and inflation is a lagging indicator.
  • We remain cautious about the outlook for the business cycle and expect market turbulence to persist.
  • Maintaining a diversified asset allocation and investment discipline will be crucial.

FED federal reserve of USA sybol and sign.

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Despite a minority view for a 100-basis-point (bps) rate hike, on Wednesday the U.S. Federal Reserve (FED) stuck with the consensus and delivered its third straight 75-bps rate hike instead, raising the federal funds target rate to 3.0% to 3.25% - the highest since 2008 - and signaling more super-sized

Chart: Federal funds target rate

Chart: Federal funds target rate (Source: Refinitiv DataStream, as of September 21, 2022.)

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