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Closeup view of the Federal Reserve building

FOMC Meeting: Key Takeaways

Wells Fargo Investment Institute shares its key takeaways from the Federal Reserve’s decision to raise interest rates.

FOMC Meeting: Key Takeaways

July FOMC meeting | July 27, 2022

Policy Announcement

The Federal Open Market Committee (FOMC) increased the federal funds rate by .75% (matching the 75-basis-point increase from the June meeting), to 2.25% – 2.50%. The Federal Reserve (Fed) expects ongoing increases to the federal funds rate. The committee will continue reducing its holdings of Treasury securities, agency debt, and agency mortgage-backed securities in accordance with its statement released last May.

Topic Details
Stated Reasons

Recent indicators of spending and production have softened. Nonetheless, job gains have been robust in recent months, and the unemployment rate has remained low.

Inflation remains elevated, reflecting supply and demand imbalances due to the pandemic, higher energy prices, and broader price pressures.

Looking Forward

The Russia-Ukraine war is creating tremendous human and economic hardship. The war and related events are creating additional upward pressure on inflation and are weighing on global economic activity.

The committee is highly attentive to inflation risks.

The committee seeks to achieve maximum employment and inflation at the rate of 2.0% over the longer term. In support of these goals, the committee anticipates that ongoing increases in the target range will be appropriate.

What Else?

While additional Fed rate hikes are expected, the Fed is leaving its options open as to the magnitude of future hikes and remains dependent on incoming data.

As long as inflation pressure remains elevated, it is our belief that the Fed will continue to raise rates even as the economy softens.

The vote in favor of the Fed action was unanimous.

Upcoming Meeting Schedule

September 21* | November 2 | December 14* | February 1

*Indicates the meeting is associated with a summary of economic projections. In addition, every meeting will be accompanied by a press conference.

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