Independence test of the market wins
Last night? This morning? Thank you for sticking with the FOMC live. Today I will focus on how the FOMC was received and tomorrow's Bank of Japan meeting.
The Federal Reserve decided to raise rates for the first time in three years. In line with markets already pricing in, the policy rate was raised by 25 basis points to 3.75%–4.00%.
As for the economic indicators, so far they have been sparse, and as I have explained before, the data did not indicate that inflation response was urgently needed at the moment. Even though the PPI and CPI figures, which roughly matched the forecasts released by various firms about two weeks earlier (just before the Fed blackout), were released, once the market fully priced in a rate hike beyond 90%, the firms adjusted their own policy rate forecasts to reflect a rate increase. This is something I have confirmed so far.