The Federal Reserve decided to hold the US interest rates between 5.25% and 5.5% for the fifth straight meeting since raising the borrowing costs in July 2023.
The two-day meeting was held on March 19-20.
Policymakers confirmed their previous expectations of cutting interest rates three times this year, as markets adapted to the central bank’s approach and reduced their expectations. The “Fed Watch” tool showed that the markets were 60% likely to start the monetary easing cycle at the June meeting instead of May.
The statement following the January meeting included removing the phrase “additional policy tightening”, which indicated that there was no need to raise interest rates further.
The new statement retained the wording “the committee remains highly attentive to inflation risks” as stated in March, which means that the interest-rate-setting committee remains concerned about inflation.
On Wednesday, the Fed clarified that the Federal Open Market Committee (FOMC) does not expect to reduce the target range for interest rates until it gains greater confidence that inflation is moving sustainably towards 2%.
The statement maintained the content of recent policy-setters’ messages, which stressed a patient, data-based approach while not rushing to cut interest rates until there is a clear vision regarding the path of inflation.
The Fed’s decision to stabilize interest rates is considered the sixth of its kind since the current tightening cycle began two years ago, during which the FOMC raised borrowing costs by 525 basis points, making the current tightening cycle the strongest in four decades.
The markets are awaiting Jerome Powell’s, Chairman of the Federal Reserve, press conference, to learn more about the interest rate cuts, two years after the start of the current monetary tightening cycle. Borrowing costs rose in March 2022 for the first time since 2018 to combat inflation.
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