- The Federal Reserve raised its benchmark rate by a quarter point, setting the fed funds target range at 3.75%–4% — the first hike since July 2023, following six reductions totaling 175 basis points from July 2023 through early 2026.
- The HKMA raised Hong Kong's base rate to 4.25%, the first increase since 2023, moving hours after the Fed.
- CME Group's FedWatch tool showed traders placing odds above 90% on the hike, up from 36% a month earlier.
- Morgan Stanley economists revised their call to two hikes this year and expect a second increase in December.
- The hawkish pivot is driven by consumer prices up 4.2% year-over-year in May, a firm labor market, and crude oil back above $100 a barrel on the Iran conflict.
Quotes
“The plain fact is that inflation is too high and has been for too long”
“strong, unanimous, and unambiguous”
“well anchored”