On Wednesday, the Federal Open Market Committee (FOMC) raised the fed funds rate by 25 basis point at its May 2023 meeting. This marks the tenth consecutive hike, bringing the target range at 5.00% – 5.25%. Fed Chair Powell kept the door open by stating that they will take a data-dependent approach in determining the next steps. Powell also opposed market predictions that the Fed will lower rates by the end of the year. The turmoil in US regional banks added to market volatility causing a drop on Wall Street.
In March 2023, US headline consumer price index (CPI) slowed for nine consecutive months to 5%, while core CPI slightly rose to 5.6%, from 5.5%. The personal consumption expenditure (PCE) price index eased to 4.2% year-on-year in March 2023, from an upwardly revised 5.1% in the prior month. The annual core PCE, the Fed’s preferred gauge, rose by 4.6%, slightly higher than market forecasts of 4.5% and still above the central bank’s 2% target.
The ADP report showed that 296.000 private payrolls were added in April 2023, well above the forecast of 148.000 and a downwardly revised 142.000 in March.