(Fed) Minutes of the Federal Reserve in early May have indicated that the central bank intends to increase interest rate by 50 basis points at its “next couple of meetings.”
The May minutes pointed out that the officials agreed at keeping increasing rates to match the central bank goal of getting to a neutral setting, which does not either boost or derail growth.
Officials further indicated that it could pursue a restrictive policy stance based on the prevailing economic outlook. The suggestion was that the central bank might target a higher rate than markets anticipate through faster hikes or lengthening the tightening cycle.
The Fed minutes still indicated that although the central bank may pursue an aggressive action, it is wary of the uncertainty about the outlook. Officials indicated that risk-management considerations would guide the future policy stance.
Fed officials further indicated their intention to start trimming the $9 trillion balance sheet in June. The central bank’s plan will allow a certain amount to roll off each month, with a target to reach $95 billion by August.
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