In line with market expectations, the US Federal Reserve kept its federal funds rate range unchanged at 3.50%-3.75% on Wednesday, marking the fourth consecutive meeting without any adjustments, as officials carefully balance ongoing inflation concerns against indications of slowing economic growth. The Federal Reserve stated that it will thoroughly assess incoming data, the evolving economic outlook, and the balance of risks when considering further adjustments to the target range for the federal funds rate. The decision was met with four dissents, including one dovish and three hawkish votes. Fed Governor Stephen Mirran advocated for a 25-basis-point rate cut, while Beth Hammack, Neel Kashkari, and Lorie Logan preferred to maintain rates while removing any easing bias.
Prior to the announcement, bitcoin prices experienced a 0.5% decline over 24 hours, trading below $76,000, while US stocks saw 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 Treasury up 5 basis points to 4.40%.
Today's meeting is expected to be the last 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 on Wednesday. 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 shift to Powell's post-meeting press conference, where traders will seek clues on the future trajectory of monetary policy.
Following a sharp decline earlier this month amid hopes for a lasting peace between the US and Iran, oil prices have rebounded to near post-war highs, with WTI crude trading just below $105 per barrel. Higher energy costs contribute to increased headline inflation but can also slow economic activity, putting the US central bank in a challenging position: which of its mandates - price stability or economic growth - should it prioritize?