FOMC

As 2022 unfolds, a confluence of challenges has affected pricing, trading and fund flows in the muni market.

The market is being driven by the prospect of higher long-term inflation and the potential that the Federal Reserve may have to raise rates further than expected.

Democratic Sen. Joe Manchin said he won’t back President Joe Biden’s nominee for the Federal Reserve vice chair of supervision, Sarah Bloom Raskin — likely dooming her confirmation in the Senate given Republican opposition.

DASNY leads the calendar with $2.3 billion of exempt personal income tax bonds and $662.32 million of taxables. Potential volume is slated to be $5.11 billion, with $4.392 billion of negotiated deals and $718.1 million of competitive loans.

Sarah Bloom Raskin’s nomination to be Federal Reserve vice chair of supervision has taken another hit as key Senate Democrat Joe Manchin suggested President Joe Biden’s other four central bank nominees move forward without her.

Federal Reserve Bank of Chicago President Charles Evans said the central bank should increase interest rates to close to its “neutral” setting this year, implying as many as seven quarter-point hikes.

The Russian invasion of Ukraine could slow interest rate hikes and has led the market to pull back on the chances of a 50-basis-point liftoff.

Federal Reserve Bank of Atlanta President Raphael Bostic said he favors raising interest rates by 25 basis points at the Federal Open Market Committee’s March meeting but would consider a larger half-point move if monthly inflation readings fail to decline from elevated levels.

“With inflation well above the FOMC’s longer-run objective and a strong labor market, the Committee expects it will soon be appropriate to raise the target range for the federal funds rate,” the Fed said.

The Federal Reserve formally adopted tough, sweeping restrictions on officials’ investing and trading, aiming to prevent a repeat of the ethics scandal that engulfed the U.S. central bank last year.

Federal Reserve Bank of Cleveland President Loretta Mester said she supports raising interest rates next month and tightening policy at a faster pace if needed to curb inflation.

Federal Reserve Bank of St. Louis President James Bullard said bringing down inflation may require the central bank to overshoot a neutral target interest rate, which he sees as about 2%.

In an interview on Thursday, Federal Reserve Bank of St. Louis President James Bullard discussed his outlook for monetary policy following a report showing surging consumer prices.

Sarah Bloom Raskin tried again Wednesday to assuage Republicans’ concerns about her hawkish stances on mitigating climate risks ahead of a vote on her nomination to be Wall Street’s top bank regulator.

Former U.S. Treasury Secretary Lawrence Summers said investors need to brace for the Federal Reserve to potentially raise interest rates at all seven remaining policy meetings this year and even for it to hike by more than a quarter point in one go.

Federal Reserve Bank of St. Louis President James Bullard said he would like to raise interest rates at the central bank’s meetings in March and May but played down the benefits of a larger-than-expected move.

Federal Reserve Bank of San Francisco President Mary Daly said the central bank could raise interest rates as early as March to fight high inflation, but she cautioned against overreacting and tightening policy too fast.

Bostic stuck to his prediction that three quarter-point increases starting in March is the most likely scenario, though stubbornly high consumer prices may justify a more robust rate rise.

The two biggest U.S. banks raised their forecasts of how quickly the Federal Reserve will raise interest rates this year, with Bank of America Corp. predicting a move at every meeting to tackle the highest inflation in four decades.

The statement offered no surprises, but Fed Chair jerome Powell's refusal to denounce more hawkish scenarios hurt market sentiment.