Despite the Fed tightening monetary policy—increasing the fed funds rate 75 basis points—real rates* remained deeply negative at the end of April, ticking up only 30 bps over the month.
As high inflation and economic uncertainties persist, Acting Comptroller of the Currency Michael Hsu said that “now is the time for banks to take a fresh look at their exposures and take actions to adjust their risk positions—to ‘trim their sails,’ so to speak—ahead of potential uncertainty and volatility.”
Inflation eased a little in April, though remained elevated above market expectations. The rate of inflation continues to exceed growth in average hourly earnings for most workers, with some exceptions like for those in the leisure and hospitality sector.
In a sign of continuing U.S. consumer strength, monthly credit card purchase volumes rose across risk tiers in last year’s fourth quarter, the third consecutive increase, according to ABA’s latest Credit Card Market Monitor.
In a significant move today, the Federal Reserve announced that it will increase the target range for the federal funds rate to 0.75 to 1%, and signaled that “ongoing increases in the target range will be appropriate.”
The first estimate for GDP in Q1 2022 came in well under expectation, contracting at an annualized rate of 1.4%. This was largely due to worsening net exports and a decline in private inventories and government spending.
Economic activity expanded at a moderate pace between February and mid-April, though outlooks for future growth remained uncertain, given current geopolitical and inflation conditions, according to the Federal Reserve’s Beige Book release of the year.
Nearly 2.34 million people traveled through a TSA checkpoint in the U.S. on April 14, up 56.7% year-over-year.
The Manheim Used Vehicle Value Index decreased 7.8 points in March to 223.5, the biggest drop in used car prices since April 2020.
Federal Open Market Committee members said monthly reductions in securities holdings should be capped at about $60 billion for Treasury securities and about $35 billion for mortgage backed securities.