As widely anticipated, 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 continue to balance persistent inflation risks with signs of slowing economic growth. In its policy statement, the Fed noted 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. The rate decision was met with four dissents, including one dovish and three hawkish views. Fed Governor Stephen Mirran advocated for a 25-basis-point rate cut, while Beth Hammack, Neel Kashkari, and Lorie Logan preferred to maintain the current rate while removing any easing bias.
Bitcoin prices remained under pressure, trading about 0.5% lower over the past 24 hours, at just below $76,000. US stocks experienced modest declines, with the Nasdaq down 0.35%. Yields rose, with the two-year Treasury increasing 9 basis points to 3.93% and the 10-year Treasury up 5 basis points to 4.40%. Today's central bank meeting is likely to be Jerome Powell's last as chairman, as his term ends on May 15.
His successor, Kevin Warsh, passed a Senate Banking Committee vote earlier on Wednesday, paving the way for him to take over. The three hawkish dissents suggest that Warsh may 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, as traders seek 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 can contribute to increased headline inflation, but they 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?