The first thing Jerome Powell mentioned was that he and the FED are strongly committed to bringing inflation back down. The FOMC decided to raise rates by another 75bps which is pretty much out of the bag and the target FED fund range now is set from 2.25% to as much as 2.5%.

If you look at the last hike cycle, we basically went from 0% to 2.25% in 2 years and this time around, we went there in just four months, so we are doing the same amount of hikes but 2-4 times as fast as compared to the last hike cycle, this tells you how aggressive that the FED is. This time around, it involves the fight against inflation which is running at a 40-year high. FED also mentioned that they will significantly reduce the size of their balance sheet that is incorporated and started a few meetings ago. Powell also mentioned the unemployment rate remains strong at a 50-year low of 3.6% and he also mentioned that another unusually high rate hike is possible in the next meeting, but that will depend on the date get from now until the next meeting which is in September, which is about 8 weeks away from now as FED is very data dependant. Inflation will be the leading indicator for FED, thus FED is tracking inflation items such as energy, agriculture, materials, and metals on a month-over-month basis to get a better understanding of where the future inflation prints could be moving forward.

Overall, there is nothing new, nothing out of the ordinary. I think it is pretty obvious what the FED is trying to do is to raise rates. They are looking front load these rates so they are moving faster now in hopes of slowing down in the future. Also when it comes to the recession, Powell does not believe that the US is in the recession citing a very strong labor market and unemployment but that is also a very lagging indicator. Tomorrow is GDP day, which is very widely expected to be negative in the second quarter of 2022.