May 25, 2022.

The minutes from the Federal Reserve's most recent policy meeting showed that the central bank is likely to raise interest rates by half a percentage point each in June and July.

Senate Banking Powell

Powell is the Federal Reserve Chairman.

Tom Williams/Pool via ASSOCIATED PRESS

The S&P 500 gained 0.8% and the Nasdaq gained 1.4% as investors assessed the minutes of the Fed's policy meeting earlier in May.

According to the latest minutes, there is a consensus among Fed officials about the need for tighter monetary policy from the central bank, while interest rates could be increased more quickly than markets have priced in.

Most officials agreed that it would be necessary to raise interest rates by half a percentage point at the upcoming meetings in June and July.

The stance of monetary policy should be moved toward a neutral posture, but a restrictive stance on policy may be appropriate.

The central bank is keeping an eye on the economic impact of surging inflation, but officials expect GDP growth to rebound in the second quarter and advance at a solid pace over the remainder of the year.

Retail and consumer stocks, which have been hard-hit in the last couple of weeks after dismal earnings and profit warnings from several major companies, led the market gains on Wednesday.

According to the minutes from the Fed's May 3-4 meeting, most participants judged that 50 basis-point increases in the target range would likely be appropriate at the next couple of meetings.

What To Watch For:

The minutes from the last meeting of the Federal Open Market Committee gave a glimpse of hope that they could change their policy stance later in the year. The central bank is growing concerned about the markets for Treasuries and commodities.

Key Background:

The Federal Reserve raised interest rates by half a percentage point earlier this month, the largest increase yet in the battle to combat surging inflation. The central bank is expected to raise its rate in June, according to the data. Inflationary pressures and the prospect of rising rates have weighed on markets, with stocks having one of their worst starts to a year on record. The S&P 500 fell into bear market territory last week and is now 17% below its January record high.

The stock market has been selling off as the tech shares have fallen.

Bill Ackman says the Fed isn't fighting inflation.

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