The US Federal Reserve has kept its benchmark interest rate unchanged at 3.50%-3.75%, as anticipated by the market, marking the fourth consecutive meeting without a rate adjustment. This decision reflects the Fed's careful consideration of ongoing inflation risks and signs of slowing economic growth. In its policy statement, the Fed noted that it will continue to assess incoming data, the evolving outlook, and the balance of risks when determining the extent and timing of future adjustments to the target range for the federal funds rate.
The rate decision was met with four dissents, including one dovish and three hawkish votes. Fed Governor Stephen Mirran advocated for a 25 basis point rate reduction, while Beth Hammack, Neel Kashkari, and Lorie Logan preferred to maintain the current rate while removing any easing bias. The news led to a modest decline in bitcoin and US stocks, with yields increasing, particularly the two-year Treasury, which rose 9 basis points to 3.93%.
Today's meeting is likely the last to be presided over by Jerome Powell, whose term as chairman ends on May 15, and will be succeeded by Kevin Warsh, who cleared a Senate Banking Committee vote earlier in the day. The three hawkish dissents indicate that Warsh may face challenges in implementing rate cuts, even if that is his desired direction. Market attention will now turn to Powell's post-meeting press conference for insights into the future of monetary policy. Oil prices have rebounded to near post-war highs, with WTI crude trading just below $105 per barrel, which can contribute to higher headline inflation but also slow economic activity, putting the US central bank in a difficult position regarding its dual mandates of prices and economic growth.