Phillip Macro Update – Key Points for November FOMC Meeting November 9, 2022 363


The U.S. Federal Open Market Committee (FOMC) concluded their two-day meeting on the 2nd of November 2022. The meeting dicussed the Fed’s monetary policy stance and economic projection.


Key pointers to note in this meeting

1.Interest rates – The U.S Federal Reserve (Fed) has increased its benchmark interest rate by another 75bps to a range of 3.75% – 4%. This will be the 4th consecutive ¾ percentage point hike this year and for this November’s meeting, there was no dot plot graph being provided as it is published every quarter. The next dot plot graph would be available after the December meeting.


2. Tight labor market – Despite a slowdown in consumer spending, the labour market still remains extremely tight in which the demand still exceeds supply. (Unemployment rate in September edge down from 3.7% to 3.5%). The Fed also mentioned that a sustained period of below trend growth and the softening of the labor market would be required before inflation can be reduced.


3. Guidance – In terms of guidance, Chairman Jerome Powell did not give any clear indication in this meeting. He pointed out that there could be a possibility of a slowdown, either at the December meeting or the following one in January next year. But no decision has been made as of the current moment and it will be dependent on the totality of incoming data. With CPI results to be released on 10 November 2022, it may provide a rough indication on the potential hike in the upcoming December meeting.


4. Abiding hawkish views – Although Chairman Powell did mention that there could be a possible slowdown in rate increases, he also stated that the reduction in size of rate increases does not mean that the Fed is close to pivoting away from rising rates and they are still strongly committed to returning inflation back to their 2% objective.


5. Higher-than-expected rates – Back in September’s meeting the Fed had provided the dot plot graph indicating that interest rates could reach a range of 4.6% – 4.8% in 2023 before it starts tapering off. But with recent incoming data such as total PCE prices rising by 6.2% YoY and core PCE prices up by 5.1% YoY in September (The 0.3% increase in PCE MoM and 0.5% increase in core PCE MoM was in line with expectation). This has signalled the Fed to suggest that the interest rate peak will be higher than what was previously expected in its earlier meeting.


6. Market expectation – In Figure 1, it is the Fed’s Fund futures which is what the market or speculators are expecting for future rate hikes. It shows that the market is also expecting the interest rate to peak around the 5.1% region in May 2023, which is higher that what the Fed had projected in its previous meeting.


Figure 1 : Fed Funds Rate Expected To Peak In June 2023

Source: Bloomberg, PSR


Point to ponder

With the Fed projecting interest rates to taper off around May next year and treasuries having an inverse relationship with interest rates, investors may consider looking into iShares 20+ Year Treasury Bond (TLT) exchange traded fund (ETF) as one could lock in a higher rate at this juncture before rates start to pivot during the May period. iShares 20+ Year Treasury Bond (TLT) is tradable on our POEMS platform. For more information, please visit

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About the author

Shawn Sng
Research Analyst

Shawn is a credit analyst who handles bond analysis and research for the fixed income desk. He graduated with a Bachelor of Science in Banking and Finance from the University of London.

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