Policymakers at the Federal Reserve agreed they were "very vigilant about inflation risks," according to minutes from the May 3-4 Federal Open Market Committee meeting. Specifically, they noted that the implications of the war in Ukraine on the US economy were highly uncertain and that lockdowns in China were likely to worsen supply chain disruptions.
Note:- Get more information about fed officials aggresssive hikes early allowing for flexibility later in year.
All participants in the FOMC meeting agreed to the 50 basis point rate hike and that it is appropriate to start reducing the size of the Fed's balance sheet on June 1st.
"Most participants felt that increases of 50 basis points in the target range would likely be appropriate in the next two meetings," the minutes say.
Many participants said that taking strong policy action now would leave the FOMC well positioned later this year to gauge the effects of policy tightening “and the extent to which economic developments warrant policy adjustments. This implies that the central bank could take a break after a few meetings to assess the effects of policy actions.
"Several participants" said it might be appropriate for the FOMC to consider selling agency mortgage-backed securities once balance sheet liquidation is "well under way." “Any MBS agency sales schedule would be announced well in advance,” the minutes read.
Recall that the Federal Reserve raised its reference rate by 50 basis points, its first increase of this magnitude in 22 years, to 0.75%-1.00% and decided to start reducing its balance sheet in June.
As of mid-afternoon Wednesday, all three major US stock averages are in the green: Dow +0.1%, Nasdaq +1.1%, S&P 500 +0.6%. The 10-year Treasury yield fell 1 basis point to 2.75%.
After the May 4 meeting, Chairman Powell discussed the strength of the economy, saying rate hikes of 50 basis points would be "on the table for the next two meetings."