3 Important Formulations in Powell's Speech Pay Attention! Here's What Analysts Need To Know 'Traders'

<p>&nbsp;As widely expected, the Federal Reserve raised interest rates by 25 basis points on Wednesday. The Federal Open Market Committee (FOMC) raised its reference rate to a range of 5.25-5.5%.</p><p><br /></p><p>With this, the Fed has increased the reference interest rate to the highest level in 22 years.</p><p><br /></p><p>"Policymakers will continue to monitor the implications of incoming information for the economic outlook," the Fed said in a prepared statement.</p><p><br /></p><p>The hike in July came after the Fed decided to hold off in June and after the latest inflation data showed price growth slowing more than expected. On the other hand, the US economy grew faster than expected in the first quarter.</p><p><br /></p><p>The chairman of the Fed, Jerome Powell, left no indication of another interest rate hike at the next policy meeting scheduled for September.</p><p><br /></p><p>"It is possible that we will raise the funds rate at the September meeting if the data presented is justified, and I would also say that it is possible that we will choose to keep interest rates at that meeting", Powell said.</p><p><br /></p><p>He reiterated the Fed's position to monitor incoming data and make decisions on a meeting-by-meeting basis. Speaking about June's CPI data, he said it was "just one report in a month's worth of data."</p><p><br /></p><p><br /></p><p>"We hope inflation will follow a lower band, in line with the June CPI reading," he added. "But we don't know and we'll have to see more data."</p><p><br /></p><p>Overall, the 3 key takeaways from Powell's press conference include:</p><p><br /></p><p>1. The Fed will not lower interest rates this year;</p><p>2. The Fed is no longer predicting a recession;</p><p>3.The Fed does not see inflation returning to the Fed's 2% target until around 2025.</p><p><br /></p><p>Wall Street analysts also came forward to comment;</p><p><br /></p><p>Wells Fargo: “Despite the Fed's rhetoric, markets are indicating that the Fed is now done tightening monetary policy. We believe this is true for now, but with firm consumer/improving confidence and an unlikely recession, inflation is likely to pick up again in 2023.”</p><p><br /></p><p>Erste Group: “The coming weeks until the next FOMC meeting could be challenging. Markets can change their opinion several times if the economic data does not show a clear picture at the time, as expected. Without a doubt, however, inflation data will play a very important role. We expect further indications of weaker price pressures here, which is why the probability of unchanged interest rates in September is currently dominant for us.”</p><p><br /></p><p>Finally, Bank of America views “We maintain our view for another 25 basis point interest rate hike at the September FOMC meeting to a terminal target range of 5.50</p>