In a Very “Hawkish Skip,” the Fed Keeps Rates at 5.25% Top of Range, But Sees Two More Rate Hikes this Year. QT Continues

By Wolf Richter for WOLF STREET.

Amid massive expectations of a “pivot” or a “pause,” or at worst, a “hawkish skip” followed by one rate hike, the FOMC decided on a “very hawkish skip”: It kept its policy rates unchanged, with the upper end at 5.25%. With this “skip,” the Fed has hiked by 500 basis points in 15 months. The vote was unanimous.

But it sees two more 25-basis-point rate hikes this year, as per its newly updated median projections in its “dot plot.” This turns today’s decision into a “very hawkish skip,”

Federal funds rate target at a range between 5.0% and 5.25%.

Interest it pays the banks on reserves at 5.15%.

Interest it charges on overnight Repos at 5.25%.

Interest it pays on overnight Reverse Repos (RRPs) at 5.05%.

Primary credit rate at 5.25% (what banks pay to borrow at the “Discount Window”).