In line with market expectations, the US Federal Reserve opted to keep its benchmark interest rate unchanged at 3.50%-3.75% during its meeting on Wednesday, marking the fourth consecutive meeting without any adjustments, as officials continue to weigh the risks of persistent inflation against signs of a slowing economy. The Federal Reserve stated in its policy statement, "The Committee will carefully assess incoming data, the evolving outlook, and the balance of risks when considering the extent and timing of additional adjustments to the target range for the federal funds rate." The rate decision was met with four dissents, including one dovish and three hawkish views. Fed Governor Stephen Mirran favored a 25 basis point rate cut, while Beth Hammack, Neel Kashkari, and Lorie Logan preferred to maintain the current rates while removing any easing bias. Prior to the announcement, bitcoin prices remained under pressure, with a 0.5% decline over the past 24 hours, trading just below $76,000.
US stocks experienced modest declines, with the Nasdaq down 0.35%. Yields saw a significant increase, 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 the last to be presided over by Jerome Powell, whose term as chairman is set to end on May 15. His successor, Kevin Warsh, cleared a Senate Banking Committee vote earlier on Wednesday, paving the way for him to take over as Powell steps down.
The three hawkish dissents indicate that Warsh may face challenges in implementing rate cuts, should he choose to do so. Market attention will now shift to Powell's post-meeting press conference, where traders will be seeking insight into the future direction of monetary policy. After a sharp decline earlier this month amid hopes of 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. The increase in energy costs contributes to higher headline inflation numbers but can also slow economic activity, putting the US central bank in a difficult position: which of its mandates – prices or economic growth – should it prioritize?