In line with market expectations, the US Federal Reserve maintained its benchmark interest rate range at 3.50%-3.75% on Wednesday, marking the fourth consecutive meeting without a change, as officials balance persistent inflation risks and signs of slowing economic growth. The Fed stated that it will carefully assess incoming data, the evolving outlook, and the balance of risks when considering further adjustments to the target range for the federal funds rate.
There were four dissents to the rate decision, with one being dovish and three hawkish. Fed Governor Stephen Mirran preferred a 25-basis-point rate cut, while Beth Hammack, Neel Kashkari, and Lorie Logan wanted to maintain rates while removing any easing bias.
Bitcoin prices remained under pressure, down about 0.5% over the past 24 hours, trading just below $76,000. US stocks experienced modest declines, with the Nasdaq down 0.35%.
Yields rose, with the two-year Treasury up 9 basis points to 3.93% and the 10-year up 5 basis points to 4.40%. Today's central bank meeting is likely to be Jerome Powell's last as chairman, with his term ending on May 15. His replacement, Kevin Warsh, is on track to take over after passing a Senate Banking Committee vote earlier on Wednesday. The three hawkish dissents suggest that Warsh may face challenges in implementing rate cuts, even if that is his desired direction.
Attention will now shift to Powell's post-meeting press conference, where traders will seek clues on the future of monetary policy. After a sharp decline earlier this month amid hopes for a lasting peace between the US and Iran, oil prices have rebounded to near their post-war highs, with WTI crude trading just shy of $105 per barrel. Higher energy costs can feed into headline inflation numbers but may also slow economic activity, putting the US central bank in a difficult position: which of its mandates - prices or economic growth - should it prioritize?