FOMC Holds Rates Steady at 4.25%-4.5%, Signals 2025 Cuts Amid Inflation Fight
FOMC The Federal Reserve left interest rates unchanged at 4.25%-4.5% during its FOMC meeting today, maintaining a cautious stance as inflation remains elevated. The policymakers indicated future rate cuts for 2025 yet stressed that no quick cuts will come until they believe inflation is moving toward the 2% target. The Federal Reserve decided to reduce its balance sheet reduction program by changing the Treasury roll-off pace from 25 billion to 5 billion per month.
Fed Rate Decision Highlights Growth Risks, Dissent Over Balance Sheet
While the Fed rate decision was unanimous on holding rates, Governor Christopher Waller dissented over the balance sheet taper, reflecting internal debate. The revised statement brought attention to economic growth that appeared “moderating” which agrees with the Atlanta Fed’s Q1 GDP forecast of -2.4%. Jerome Powell, set to speak at the FOMC meeting time of 2:30 p.m. ET, faces pressure to address rising recession fears and the impact of Trump-era tariffs.
Powell Press Conference Data Dependency and Tariff Risks in Focus
During his post-meeting presser, Jerome Powell is expected to underscore data dependency, balancing sticky inflation against softening consumer spending and manufacturing activity. The analysts predict that Powell will steer away from discussing Trump’s proposed tariffs at his upcoming press conference even though the trade barriers demonstrate the power to increase prices and stunt economic expansion. “Uncertainty is heightened,” said Deutsche Bank’s Matthew Luzzetti, noting the Federal Reserve must now weigh geopolitical and policy volatility.
Markets React Stocks, Treasury Yields Dip Post-FOMC Decision
Following the Fed meeting today, the S&P 500 fell 0.8%, extending its 2024 loss to 4%, while the 10-year Treasury yield dropped to 4.2%. The gold market exceeded $3,000 per ounce due to safety-seeking investor behavior. Market reaction following the Fed decision today included retail sales slippage and CEO warnings from Ed Bastian at Delta Airways about strained consumer spending which worsened growth perception although the Fed aimed to provide stability to markets.
2024 Outlook Fed’s Cautious Path Amid Political, Economic Crosswinds
The Federal Reserve meeting underscores a precarious path ahead, with Trump’s deregulation and tariff agenda clashing with the central bank’s inflation goals. Moody’s expert Matt Colyar indicates that interest rate holds until late 2024 will continue but Moody’s may speed up rate cuts if economic growth weakens. For now, the FOMC remains in wait-and-see mode, navigating what Powell calls a “highly uncertain” economic landscape. Read More News
