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US FEDERAL RESERVE delivers a 0.25 % hike.. it will have major global implications:

11 points

1) 25 bps hike to 4.75-5.0%

2) Statement drops reference to “ongoing increases” in favor of less hawkish “some additional policy firming may be appropriate”

3) Very few changes to forecasts, dots for 2023 stay at 5-5.25%

4) Powell at press conf indicated that most members did include an expectation of credit tightening due to recent banking sector instability.

5) He said, that without this expectation of tightening, rate forecasts would have moved up by atleast one or two 25 bps hikes

6) Powell also conceded that the Committee considered a pause today

7) Powell pushed back on rate cut expectations & noted the optionality to hike more than the dots suggest

8) In the press conf, when speaking of the various bank rescue policies, Powell said “these actions demonstrate that all depositors’ savings are safe.”

9) When asked to clarify, he was terse and repeated that “depositors should assume their deposits are safe”

10) Powell noted that “deposit flows in banking system have stabilized over past week”

11) Asked if a rate hike could exacerbate problem at banks, he said the rate decision was “focused on macroeconomic outcomes” & banks would be addressed with their lending facilities

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