Editor’s note: This story has been updated with more details.
The Federal Reserve maintained interest rates between 5.25% and 5.5% Wednesday during its first meeting of 2024, aligning with market predictions.
This decision represents the fourth consecutive Federal Open Market Committee (FOMC) meeting where the cost of borrowing was kept steady, reinforcing the belief that the interest rate hiking cycle has ended.
According to policymakers, “recent indicators suggest that economic activity has been expanding at a solid pace. Job gains have moderated since early last year but remain strong, and the unemployment rate has remained low. Inflation has eased over the past year but remains elevated.”
The Federal Reserve’s preferred measure of inflation, the Personal Consumption Expenditures (PCE) price index, remained at 2.6% year-on-year in December 2023, persisting at levels close to the lowest seen in nearly three years.
Forget About Imminent Rate Cuts, Fed Says
There are notable variations in the language of the official Fed statement, particularly the omission of any mention of a future tightening bias.
The phrase “in determining the extent of any additional policy firming that may be appropriate to return inflation to 2 percent over time” has been revised to: “In considering any adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks.”
The Fed, however, also throws cold water on speculations regarding imminent rate cuts.
“The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent,” the statement says.
Market Reactions
Prior to the Fed meeting, traders estimated a 54% probability of a rate cut in March, with expectations of up to six rate cuts by the end of 2024.
Following the statement, investors trimmed rate-cut bets for the Fed March meeting to a 46% chance.
The dollar moved slightly higher while stocks edged down marginally. The SPDR S&P 500 ETF Trust (NYSE:SPY) fell 0.2% minutes after the Fed rate decision.
Riskier assets such as the iShares Russell 2000 ETF (NYSE:IWM) and Bitcoin (CRYPTO: BTC) were 0.5% and 0.4% lower, respectively.
Investors are…
Click Here to Read the Full Original Article at Cryptocurrencies Feed…
