Monday Market Must-Knows: May, 8 2023

Which factors is the FOMC considering when setting rates?

Jerome Powell and the Federal Open Market Committee (FOMC) raised interest rates by 25 basis points on Wednesday. In his address, there was a significant change from the Fed’s previous statement. Jerome Powell had said that "some additional policy firming may be appropriate to lower inflation," but he removed that sentence from the statement. Instead, the committee will now consider certain factors to determine whether ‘additional policy firming’ is needed to return inflation to two percent over time. 

These factors include unemployment, GDP, and inflation. This change is important because it suggests that the FOMC may not raise rates in the future, but instead, will consider the data before making any decisions. 

This week, data on inflation, including the Consumer Price Index and the Producer Price Index, will be released. 

This week, 1,902 companies will report earnings, including PayPal, Disney, and Honda Motor Corp. Traders are encouraged to stay updated with their earnings calendar to avoid unexpected volatility, especially with bank earnings. 

Additionally, the Bank of England is expected to raise their rates by 25 basis points on Thursday, which could have a significant impact on the economy.

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