In line with market expectations, the US Federal Reserve has kept its federal funds rate range unchanged at 3.50%-3.75% on Wednesday, marking the fourth consecutive meeting without any adjustments as policymakers weigh the risks of persistent inflation against signs of a slowing economy. The Fed stated that it will carefully evaluate incoming data, the evolving economic outlook, and the balance of risks when considering additional changes to the federal funds rate target range. There were four dissenting votes on the rate decision, with one being dovish and three hawkish. Fed Governor Stephen Mirran favored reducing rates by 25 basis points, while Beth Hammack, Neel Kashkari, and Lorie Logan preferred to maintain rates while removing any easing bias.
Prior to the announcement, bitcoin prices remained around 0.5% lower over the past 24 hours, trading just below $76,000. US stocks experienced modest declines, with the Nasdaq down 0.35%.
Yields increased, with the two-year Treasury rising 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 the last presided over by Jerome Powell, whose term as chairman ends on May 15. His replacement, Kevin Warsh, cleared a Senate Banking Committee vote earlier on Wednesday, putting him on track to take over as Powell steps down.
The three hawkish dissents suggest that Warsh will face challenges in implementing rate cuts, even if that is his desired direction. Market attention will now shift to Powell's post-meeting press conference, where traders will seek clues on the future path 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 contribute to higher inflation numbers but can also slow down economic activity, putting the US central bank in a difficult position: which of its mandates - prices or economic growth - should it prioritize?