FOMC dot plot & central tendencies from June 2022 meeting. Median rate 3.4% @ end of 2022

The dot plot for June 2022 shows the median rate at the end of 2022 at 3.4%, up from 1.9% in March 2022. With the current rate at 1.7%, that implies an additional 170 bps.

For 2023, the median Fed funds target rate is up to 3.8%, up from 2.8% in March 2022 or an increase of 40 basis point from the end of 2022.

In 2024, the Fed projects a Fed funds target rate of 3.4%, down 40 basis points from the end of year 2023.

Below is the current dot plot from June 2022:

Dot plot
Doppler from June 2022

The Dot plot from March 2022, looked like this:

Dot plot
The June 2022 dot plot from the FOMC

The table of central tendencies from June 2022 now shows:

The table of central tendencies
The central tendencies from June at 2022

A summary of the central tendencies compared to March shows for 2022:

  • GDP 1.7% from 2.8% in March. That is down 1.1% from March
  • Unemployment 3.7% from 3.5% in March. That is up from 3.5% March
  • PCE inflation 5.2% from 4.3% in March. That is an increase of 0.9% from March
  • Core PCE inflation 4.3% from 4.1% in March. That is an increase of 0.2% from March

In 2023, the FOMC now sees:

  • GDP 1.7% vs. 2.2% in March
  • unemployment 3.9% vs. 3.5% March
  • PCE inflation 2.6% vs. 2.7% in March
  • Core PCE inflation at 2.7% from 2.6% March

FOMC statement from the June 2022 meeting: Fed hikes by 75 basis points

Below is the full statement from the June 2022 FOMC meeting:

Overall economic activity appears to have picked up after edging down in the first quarter. Job gains have been robust in recent months, and the unemployment rate has remained low. Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures.

The invasion of Ukraine by Russia is causing tremendous human and economic hardship. The invasion and related events are creating additional upward pressure on inflation and are weighing on global economic activity. In addition, COVID-related lockdowns in China are likely to exacerbate supply chain disruptions. The Committee is highly attentive to inflation risks.

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals, the Committee decided to raise the target range for the federal funds rate to 1‑1/2 to 1-3/4 percent and anticipates that ongoing increases in the target range will be appropriate. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in the Plans for Reducing the Size of the Federal Reserve’s Balance Sheet that were issued in May. The Committee is strongly committed to returning inflation to its 2 percent objective.

In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals. The Committee’s assessments will take into account a wide range of information, including readings on public health, labor market conditions, inflation pressures and inflation expectations, and financial and international developments.

Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michelle W. Bowman; Lael Brainard; James Bullard; Lisa D. Cook; Patrick Harker; Philip N. Jefferson; Loretta J. Mester; and Christopher J. Waller. Voting against this action was Esther L. George, who preferred at this meeting to raise the target range for the federal funds rate by 0.5 percentage point to 1-1/4 percent to 1-1/2 percent. Patrick Harker voted as an alternate member at this meeting.

Implementation Note issued June 15, 2022

Last Update: June 15, 2022

Federal Reserve hikes rates by basis points 75 vs 75 bps expected


The FOMC statement from the June 14-15, 2022 meeting is out along with the updated economic forecasts. The market was pricing in an 87% chance of a 75 basis point hike with the remainder on 50 bps. Out the Fed funds futures curve, the terminal top was in May 2023 at 3.982% with a path of 75/75/50/50 priced in for the next four meetings, including today.

Federal Reserve Chairman Jerome Powell will host a press conference at the bottom of the hour at 2:30 pm ET.

BREAKING : ECB emergency meeting reportedly scheduled for 0900 GMT

Adding that there has been no communication yet on whether a statement would be published, citing several sources with direct knowledge of the matter. Given the market rout since Thursday last week, I want to say that there has to be some form of formal communique or response by the ECB. As such, a statement is almost likely to be a necessity to provide calm to European bond markets.

However, I would not expect there to be any specific details on the tool(s) they would be using to counter fragmentation risks. The ECB is likely to just reaffirm their commitment and resolve to the matter while perhaps hinting at efforts to address the risks in the weeks/months ahead.

Closing levels: US equities chop sideways even as bond yields continue to rise

spx chart 5 mins

  • S&P 500 -14 points to 3735 or -0.4%
  • Nasdaq +0.2%
  • Russell 2000 -0.3%
  • DJIA -0.5%
  • Toronto TSX Comp -0.9%

US stocks opened higher and made a decent push to the upside just after lunch in New York. The sellers hit shortly after that and stocks fell to the lows of the day. A late rebound erased that damage and the market closed near unchanged. That was at least a bit of stabilization after the 4% plunge yesterday and it comes with more hefty moves in bonds.

  • 2-year +15 bps to 3.426%
  • 5-year +12.8 bps to 3.59%
  • 10-year +12 bps to 3.48%
  • 30-year +6 bps to 3.43%

Taiwan: Chinese military action against Taiwan with it global trade much more than Russia

If you looking for more bad news, Taiwan’s topic trade negotiator John Deng is on the wires saying in a Reuters interview:

  • Chinese military action against Taiwan would hit global trade much more than Russia’s Ukraine invasion
  • There would be a worldwide shortage of the semiconductors an event of China military attack
  • Taiwan is working with India on settling its tech tariffs dispute before WTO ruling

U.S. Commerce Secretary Gina Raimondo recently urged Congress to pass the CHIPS for America Act. That bill aims to incentivize investment in U.S. semiconductor manufacturing, research and development and supply chain security, providing income tax credit for chip equipment or manufacturing facility investment through 2026.

The CHIPS (Creating Helpful Incentives to Produce Semiconductors) for America Act was passed in January 2021. However, Congress has yet to agree on a bill that would appropriate resources for its various programs. This despite a rare bipartisan support for expanding domestic chip manufacturing.

Companies like Intel have pledged billions of dollars on plants in Arizona and Ohio. However, they are looking for assistance from the US government as a matter of national safety.

The invasion of Taiwan by China would certainly be another wrench in what is a very fragile economy that is exposed from a number of different fronts including oil, food, other  commodities , and chips. All of which have led to higher inflation.

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