As expected by markets, the U.S. Federal Reserve on Wednesday kept its benchmark federal funds rate range between 3.50% and 3.75%, marking the fourth straight meeting without change as officials weigh lingering inflation risks against signs of slowing economic growth.
“In considering the magnitude and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully evaluate incoming data, the evolving outlook, and the balance of risks,” the Fed said in its policy statement.
There were four dissents on the rate decision, one conciliatory and three hawkish. Fed Governor Stephen Mirran favored cutting rates by 25 basis points, while Beth Hammack, Neel Kashkari and Lorie Logan wanted to keep rates stable while removing any easing bias.
Under pressure ahead of the news, bitcoin remained down around 0.5% over the past 24 hours, trading just below $76,000. US stocks continued with modest declines, with the Nasdaq down 0.35%. Yields are rising, with the two-year Treasury note up 9 basis points to 3.93% and the 10-year note up 5 basis points to 4.40%.
Today’s central bank meeting will likely be the last to be chaired by Jerome Powell, whose term as chairman ends May 15. His replacement, Kevin Warsh, voted Wednesday before the Senate Banking Committee, putting him on track to take over as Powell steps down. The three hawkish dissents suggest that Warsh will have a difficult task pushing through rate cuts, even if that’s the direction he wants to take.
Attention will then turn to Powell’s press conference after the meeting, as traders look for clues on the path forward for monetary policy.
After falling sharply earlier this month on hopes for a lasting peace between the United States and Iran, oil prices have rebounded to near their post-war highs, with WTI crude trading just below $105 a barrel.
Rising energy costs naturally impact overall inflation figures, but they can also slow economic activity. This puts the US central bank in a difficult position: which of its mandates – prices or economic growth – should it prioritize?
