Originally Published: July 27, 2022 2:25PM ET
Updated: July 27, 2022 3:06 PM ET
The July Federal Reserve Meeting concluded today with the FOMC statement out at 2PM. Considering Jerome Powell’s prior statements, it will be interesting to see how hawkish or dovish things will be in 2022. Plus details could suggest how the market approaches risk-on assets like penny stocks.
Here’s a breakdown of the hot topics of the FOMC announcement from the July Fed Meeting for you to keep in mind:
Top 10 Takeaways From July Fed Meeting & FOMC Statement
- Federal Reserve Raises Rates By 75 basis points
- FOMC Vote: 12 to 0 For Fed Funds Rate Action
- Fed Says: Job Gains Have Been Robust and Unemployment Rate Has Remained Low
- Fed Says: Recent Indicators Of Spending And Production Have Softened
- Notes On War In Ukraine: It Has Created Additional Upward Pressure On Inflation & Weighed On Global Economic Activity
- Inflation Remains “Elevated” and Reflects “Pandemic Related Imbalances” with Higher Food & Energy Prices With Broader Price Pressures
- Notes On Balance Sheet Runoff: Will Speed Up In September As Planned. Monthly Caps Rising To $35 Billion For mortgage-backed securities, $60 Billion For Treasury
- Fed Will Allow Modest Deviations From Sated Amounts For Reinvestments “if needed for operational reasons.”
- FOMC Is Strongly Committed To Returning Inflation To 2% As Its Goal
- Committee decided to raise the target range for the federal funds rate to 2-1/4 to 2-1/2 percent and anticipates that ongoing increases in the target range will be appropriate
At the time of the update, S&P 500 ETF (NYSEARCA: SPY) set at the $396 area, the NASDAQ ETF (NASDAQ: QQQ) at the $302 area, the Dow ETF (NYSEARCA: DIA) at the $318 area, and Russell 20000 Small-Cap ETF (NYSEARCA: IWM) in the $181 area. Meanwhile, traders anticipate earnings results with Meta Platforms (NASDAQ: META).
[Read More] Penny Stocks To Buy Now? 4 To Watch During July Fed Announcement
Fed Chair Jerome Powell FOMC Press Conference Highlights
Notable comments from Fed Chair Jerome Powell After July 2022 Fed Meeting:
- We’re continuing to significantly reduce the size of our balance sheet
- Job vacancies near historical highs
- Unemployment rate near historical lows
- Job market still tight
- Continuing the process of significantly reducing size of the balance sheet
- Pace of rate increases will depend on data
- Another unusually large increase could be appropriate at the next meeting
- Focus on getting supply and demand in better balance
- Hard to predict monetary policy for next year because of so much uncertainty. The main data point is June SEP for the best estimate on monetary policy for now.
- When asked the reason for not doing a full 1% increase: broad support for the 75 bps move and not for 100 bps. This meeting continued the aggressive pace that began in June.
- When asked about not being in a recession and how would or would not a recession change policy: Think it’s necessary to have growth slowdown and will slow because of coming off very high growth of reopening of 2021…Should see some slowing…expect some softening in labor markets…necessary to get inflation down.
- Cannot have strong labor market without getting inflation down and doesn’t think we have to have a recession…thinks there’s a path to that.
- Need a period of growth below potential to create “some slack”
- Doesn’t think we are in a recession but references labor market for more cues
This is a developing story and will be updated as more details emerge.
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