As markets expected, the U.S. Federal Reserve held the benchmark federal funds rate range steady at 3.50%-3.75% on Wednesday, marking the fourth straight meeting unchanged as officials weigh persistent inflation risks against signs of slowing economic growth.
“In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully evaluate incoming data, evolving prospects, and the balance of risks,” the Federal Reserve said in its policy statement.
There were four disagreements with the rate decision, one moderate in tone and three hard-line. Federal Reserve Governor Stephen Mirran preferred to cut rates by 25 basis points, while Beth Hammack, Neel Kashkari and Lorie Logan wanted to keep rates stable while eliminating any easing bias.
Under pressure from the news, bitcoin it remained roughly 0.5% lower over the past 24 hours, trading just below $76,000. US stocks continued modest declines, with the Nasdaq down 0.35%. Yields are soaring, with the two-year Treasury bond up 9 basis points to 3.93% and the 10-year bond up 5 basis points to 4.40%.
Today’s central bank meeting is likely to be the last chaired by Jerome Powell, whose term as chairman ends on May 15. His replacement, Kevin Warsh, passed a Senate Banking Committee vote early Wednesday, putting him on track to take over when Powell leaves office. The three hardline dissidents suggest that Warsh will find it difficult to push through rate cuts, even if that is the direction he would like to take.
Attention will now turn to Powell’s post-meeting press conference as traders look for clues on the path forward for monetary policy.
After a sharp pullback earlier this month amid hopes for a lasting peace between the United States and Iran, oil prices have recovered near their post-war highs, with WTI crude trading just below $105 a barrel.
Higher energy costs are naturally reflected in overall inflation numbers, but they can also slow economic activity. It puts the US central bank in a difficult position: which of its mandates (prices or economic growth) should it prioritize?
