In line with market expectations, the US Federal Reserve maintained its federal funds rate range at 3.50%-3.75% on Wednesday, marking the fourth consecutive meeting without any changes, as officials carefully weigh the risks of persistent inflation against signs of a slowing economy. The Fed stated in its policy statement that it will thoroughly assess incoming data, the evolving outlook, and the balance of risks when considering further adjustments to the federal funds rate target range. There were four dissents to the rate decision, with one being dovish and three being hawkish. Fed Governor Stephen Mirran preferred a 25 basis point rate cut, while Beth Hammack, Neel Kashkari, and Lorie Logan wanted to keep rates steady and remove any easing bias.
Bitcoin prices remained under pressure, with BTC trading about 0.5% lower over the past 24 hours, just below $76,000. US stocks experienced modest declines, with the Nasdaq down 0.35%. Yields increased, 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 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 indicate that Warsh will face a challenging task in implementing rate cuts, even if that is his desired direction. Attention will now turn to Powell's post-meeting press conference, where traders will look for clues on the future direction 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 headline 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?