Fed Says Progress on Inflation Has Stalled, Keeps Rates Steady
The Federal Reserve acknowledged stalling progress in bringing down inflation to its 2% goal and opted to hold its benchmark interest rate at current levels.
Furthermore, Fed officials are “prepared to maintain the current target range for the federal funds rate for as long as appropriate,” Chairman Jerome Powell told reporters at the post-meeting press conference.
The central bank also said that it would slow the pace of reducing its balance sheet starting in June. That decision ensures money markets don’t experience an episode of volatility and stress as seen in September 2019, Powell noted.
Expectations around when the Federal Reserve will lower interest rates this year shifted only slightly following Chair Jerome Powell’s press conference on Wednesday, indicating that investors’ views had been in line with the bank’s thinking.
The odds of September and November rate cuts improved slightly following the conclusion of the Fed’s policy meeting, prices of interest-rate futures indicate. There is currently a 42.4% probability of the first rate cut coming during the September meeting, according to the CME FedWatch Tool.
“Futures are now pricing only slightly more than one rate cut this year. While it is not the central view, there is clearly also an increased probability that the Fed has to hike again,” Murray said.
