Stocks extended gains, and bond yields fell further, after Fed Chair Jerome Powell’s press conference this afternoon that accompanied the U.S. central bank’s decision to hold its key interest rate unchanged.
Decisions by the U.S. Federal Reserve have considerable influence on Canadian markets and monetary policy. The following table details how money markets are pricing in further moves in the Bank of Canada overnight rate, according to Refinitiv Eikon data as of 330 pm ET Wednesday. The current Bank of Canada overnight rate is 5%. While the bank moves in quarter point increments, credit market implied rates fluctuate more fluidly and are constantly changing.
The decision to hold the fed funds target range at 5.25%-5.50% was unanimous, while the statement was little changed. Admittedly, following the 4.9% annualised surge in GDP in the third quarter, the description of activity growth was upgraded from “solid” to “strong”, with the recent pace of jobs growth given a similar description. The statement about “the extent of additional policy firming that may be appropriate” was also retained.
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