Rate Reprieve

Unsurprisingly, the Fed left Fed funds unchanged but signaled a willingness to possibly raise it 25bps in the future, a hawkish pause. However, it doesn’t matter if the Fed raises rates once more, or not. It stretches credulity to think inflation and the health of the economy hinge on 25bps. What matters is how long the Fed ends up keeping Fed funds at the terminal rate. And they don’t know.