Federal Reserve Board Chairman Jerome Powell holds a news conference following a Federal Open Market Committee meeting at the Federal Reserve on March 22, 2023 in Washington, DC.
Alex Wong | Getty Images News | Getty Images
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Markets had expected the Fed’s quarter-point hike. Powell’s warnings on the economy caught them off guard.
What you need to know today
- Fed officials unanimously agreed to increase rates. But at the post-meeting press conference, Fed Chair Jerome Powell admitted the committee considered pausing hikes because “events in the banking system over the past two weeks are likely to result in tighter credit conditions.”
- Asked by a senator if Treasury is considering guaranteeing all bank deposits without congressional approval, Treasury Secretary Janet Yellen said it is not.
- PRO GameStop surged 35.24% on the news that the company’s had its first profitable quarter in two years. But analysts are warning investors not to jump into the stock because it’s still facing longer-term headwinds.
The bottom line
The last few Federal Open Markets Committee meetings have followed a pattern. The central bank would take a hawkish stance and hike rates aggressively, spooking markets. Then Powell’s comments at the press conference would soothe investors, who’d focus on his dovish remarks (probably unintentional and to his chagrin, I’d imagine).
This time, Powell flipped the script.
Markets had expected a hike of 25 basis points, and that’s what they got. Being right contributes to a sense of certainty, so all three major indexes actually rose after the Fed’s announcement. Indeed, Quincy Krosby, chief global strategist of LPL Financial, noted “markets are responding well to the expected 25 basis points rate hike.”
Then Powell started speaking. At…
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