Chiba Capital Financial Group Analyzes Federal Reserve's Decision to Forgo Immediate Rate Hike and Forecasts Two Future Increases

TORONTO, ONTARIO, June 16, 2023 (GLOBE NEWSWIRE) — The Federal Reserve has signalled its support for two additional interest rate rises in 2023, which includes a potential increment at the meeting slated for July. This comes after the Federal Open Market Committee (FOMC) unanimously voted to maintain the current federal funds rate at a target range of between 5 per cent and 5.25 per cent.

Mr. Richard Miller, Director of Capital Markets at Chiba Capital Financial Group, weighed in on the situation, saying, “The Federal Reserve’s decision to withhold an immediate rate increase underscores its prudence, particularly given the aggressive monetary tightening campaign that started in 2023. Despite the current pause, the central bank’s commitment to control high inflation remains firm.”

The FOMC’s decision marks the first reprieve in over a year in an aggressive monetary tightening campaign. Despite the hold, Federal Reserve chair, Jay Powell, made clear the intention to exert further pressure on the world’s largest economy to regulate persistently high inflation.

Miller added, “Although the communication around the rate pause might seem difficult, this decision allows the Federal Reserve to gather credible evidence to assess the trajectory of inflation. This is crucial to ensure the economic squeeze is sufficient before committing to further rate hikes.”

Following Powell’s press conference, traders in the futures market scaled back bets on a rate cut this year, causing the yield on the two-year Treasury note to ascend to its highest level since mid-March.

Matthew Campbell, Head of Institutional Equities at Chiba Capital Financial Group, expressed, “This period presents a critical juncture for the Federal Reserve, as it walks a fine line between combating inflation and maintaining economic stability. Policymakers need to ensure that any rate hikes are justifiable and that they take into account potential economic repercussions.”

Campbell further observed, “The Federal Reserve seems to be leaning towards maintaining tighter monetary policy in the long run, which could influence market dynamics significantly. Investors must remain adaptable, acknowledging that these policies aim to rein in inflation and foster economic resilience.”

According to projections released on Wednesday, most officials now anticipate “core” inflation, based on the personal consumption expenditures price index, to decline to 3.9 per cent this year before slowing down further to 2.6 per cent in 2024 and 2.2 per cent in 2025.

Economists are predicting that the central bank will raise rates at least two more times this year, potentially moving the benchmark rate to a range between 5.5 per cent and 6 per cent. This projection comes despite the latest consumer price index report indicating a deceleration in annual inflation and a robust labor market, thereby encouraging consumer spending.

As the Federal Reserve continues its mission to navigate and manage the economy amidst various influences, Chiba Capital Financial Group remains dedicated to providing comprehensive financial insights and strategic advice to its clients.

About Chiba Capital Financial Group
Chiba Capital Financial Group is a leading financial services company that provides comprehensive financial planning and investment management services to clients across the world. With a team of experienced advisors and cutting-edge technology, Chiba Capital Financial Group is committed to helping clients achieve their financial goals with confidence.

Media Relations Contact
Mr. Seth Atkinson, Director of Investment Research
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Toronto, M5H 2A3, Ontario, Canada.


Mr. Seth Atkinson

Chiba Capital Financial Group

seth.atkinson at