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As was widely anticipated, this week the Federal Open Market Committee (FOMC) voted unanimously to raise the federal funds rate by 0.25% to a target range of 5.25% to 5.50%, the highest level in over 20 years. Fed Chair Powell maintained that the FOMC will remain data dependent going forward, and that they do not anticipate a recession, leaving the option open for the possibility of additional rate hikes in the future if needed.

This week, market participants were focused on inflation and associated implications for monetary policy. The June Consumer Price Index (CPI) came in slightly below expected, with the headline CPI up 0.2% month-over-month and 3.0% year-over-year, decelerating from 4.0% year-over-year in May.