.jpg "An Important Week for More Data-Dependent Fed Photo")
As expected, the Federal Reserve (Fed) delivered another interest rate hike during last week’s meeting, bringing short-term interest rates to the highest level in more than 20 years.1 Since the current rate-hiking cycle started in March 2022, Fed Chair Jerome Powell has emphasized the need for policymakers to prioritize reigning in high inflation. However, during last Wednesday’s post-meeting press conference, Powell assumed a more neutral posture emphasizing the importance of incoming economic data for Fed policy decisions moving forward.
Christine Lagarde, president of the European Central Bank, echoed a similar dovish shift following the bank’s interest rate hike last Thursday.2 Equity and credit markets continued to grind higher on the prospect of more stable monetary policy from global central banks.
This week’s economic calendar will give Fed policymakers plenty to digest with the Senior Loan Officer Opinion Survey on Bank Lending Practices out Monday, manufacturing and service sector purchasing managers’ index reports on Tuesday and Thursday followed by the July employment report on Friday.3
Sources:
1CNBC – Fed approves hike that takes interest rates to highest level in more than 22 years; 7/26/23
2AP – European Central Bank hikes interest rates to combat inflation and leaves door open to more; 7/27/23
3MarketWatch – U.S. Economic Calendar; as of 7/31/2023
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