The Fed has met market expectations with a hawkish pause, leaving the benchmark rate in the 5.25%-5.50% range. The Fed indicated one more hike this year and signaled what many had expected, “borrower costs will likely stay higher for longer after the one more hike this year.” 12 of the 19 officials favored another rate hike this year. The Fed projections now only show a reduction in the benchmark rate to 5.1% by the end of 2024, signaling a much slower reduction in rates, eliminating two cuts previously indicated by the DOTS plot and expected by the market. The new DOTS plot projections showed 3.9% by the end of 2025 and 2.9% by 2026. The 10-year is currently at 4.35% after the announcement.

SOURCE: NewPoint Capital Markets Desk  9/21/23