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 "US Federal Reserve Chair Jerome Powell")
US Federal Reserve Chair Jerome Powell (Photo: Bloomberg)
The US Federal Reserve held interest rates steady on Wednesday at 5.25 per cent – 5.50 per cent for the sixth straight meeting, in line with market estimates.
While announcing its interest rate decision after a two-day Federal Open Market Committee (FOMC) meeting, US apex bank said there has been ‘a lack of further progress toward the committee’s two per cent inflation objective.’
“The FOMC does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably towards 2 per cent,” the Fed said.
This still casts doubt on the timing of any rate cut.
FOMC signaled that it is still leaning towards eventual reductions in borrowing costs, but has put a red flag on recent disappointing inflation readings. It has suggested a possible stall in the movement towards more balance in the economy.
US Fed said risks to achieving employment and inflation goals ‘have moved toward better balance over the past year,’ as opposed to ‘are moving into better balance’ in march policy statement.
The US central bank also announced that it will scale back the pace at which it is shrinking its balance sheet starting on June 1, allowing only $25 billion in Treasury bonds to run off each month versus the current $60 billion. Mortgage-backed securities will continue to run off by up to $35 billion monthly.
— Federal Reserve (@federalreserve) May 1, 2024
“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 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 two per cent,” said the FOMC in its unanimously-approved policy statement.
The US central bank also announced that it will scale back the pace at which it is shrinking its balance sheet starting on June 1, allowing only $25 billion in Treasury bonds to run off each month versus the current $60 billion. Mortgage-backed securities will continue to run off by up to $35 billion monthly.
Read the complete FOMC policy statement
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First Published: May 01 2024 | 11:46 PM IST
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