FOMC statement: First mentioned two rate hikes in 2023

 Fed's June FOMC resolution surprised hawks, First mentioned two rate hikes in 2023

 On Thursday (June 17), the Federal Reserve issued a June FOMC interest rate resolution, maintaining the federal funds rate in the range of 0-0.25%.  and maintain a plan to buy bonds worth 120 billion USD.  At the same time, it first hinted at twice before the end of 2023. The rate hike sent gold plummeting, and US bond yields and the US dollar surged.

 FOMC statement: First mention of two rate hikes in 2023.

 In terms of interest rates, the Federal Reserve kept its benchmark interest rate unchanged at 0% -0.25%, in line with market expectations.  FOMC members strongly agreed with this interest rate decision (in line with the previous meeting).

 Regarding the dot chart expectations, the time for the first rate hike has been pre-calculated.  The dot chart shows that the Fed will raise rates twice (50 basis points) by the end of 2023.  Of which, 7 committee members are expected to start raising interest rates in 2022, and 4 committee members in March this year.  The 13 committee members are expected to start raising rates in 2023, and there will be 7 committee members by March of this year.

 In terms of economic expectations, this year's GDP growth forecast and PCE inflation forecast for the next three years will be raised.

 For the bond buying guidelines, we will continue to increase our holdings of at least $80 billion in treasury bonds and at least $40 billion in mortgage-backed securities each month until the  The commission's goals of full employment and price stability have made significant progress.  The statement says that the Federal Reserve strives to achieve full employment and an inflation rate of 2% over a longer period of time.

 Regarding the operating interest rate, the excess reserve interest rate (IOER) was adjusted from 0.1% to 0.15%, effective from June 17;  Overnight reverse redemption rate is adjusted from 0% to 0.05%, effective from June 17.

 It is worth mentioning that the Federal Reserve announced that it will extend the temporary US dollar liquidity swap agreement with nine central banks through December 31, 2021. The instrument is designed to secure funds.  The supply of US dollars is stable on a global scale and helps the US Treasury bond market to function smoothly.

Analyst: Fed will start reducing QE from the end of this year to early next year, and will start raising rates in 2023;

 ① AMP Caipital Strategists point out that the Fed has indeed discussed the prospect of reducing the intensity of its monetary easing measures in its overnight policy language, meaning that the topic has already been discussed.  is on the agenda rather than just speculation by investors.  .  As a result, the process involved will be done gradually in the near term, so the QE downsizing is expected to be done between the end of 2021 and the beginning of 2022;

 ② At the same time, the Fed's "dot chart" also shows that it will raise rates twice before the end of 2023, although Fed Chairman Powell has since tried to lower this expectation, saying that it is still  There is still a lot of uncertainty in the long-term-terms outlook., but in the agency's view, the Fed should start raising interest rates after entering 2023. This would be a logical move if there are no accidents  big.