• So, what’s the story with the FOMC meeting tomorrow evening? Not too long ago – six weeks to be precise – Chair Powell put policy on auto-pilot for the June and July meetings. There would be 50bps hikes at each meeting. End of story. And there was the implicit message that the Fed would review the situation at the September FOMC. The reading here being that Powell & Co were counting on inflation having move past the peak, which would allow them to dial down the pace and/or increments of rate hikes from September onward. However, even before Friday’s CPI shocker the Vice Chair, Lael Brainard, had suggested there wasn’t much to make a case for a pause. Barely two weeks ago she basically said the Fed should hike at each meeting unless there is real trend of improving month-on-month inflation readings. And to prevent another false dawn like we just experienced, two months of better data (less bad data) probably won’t cut it.


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