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FOMC Keeps Rates Unchanged, QT Taper to Begin in June
The Federal Open Market Committee kept the federal funds rate in a target range of 5.25% to 5.5% on Wednesday, as widely expected, and gave no signal that it plans to lower it anytime soon.
Policymakers have been on hold since they last raised interest rates in July 2023.
“In recent months, there has been a lack of further progress towards the Committee’s 2% inflation objective,” the statement read.
“The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%.”
Fed officials added that the economy “has continued to expand at a solid pace” and “job gains have remained strong.”
Although inflation has decreased over the previous year, policymakers recognized that it is still high and that recent months have seen a noticeable lack of additional advancement toward the central bank’s objective.
Expectations for interest rate cuts (for 2024 and 2025) have dropped significantly since the last FOMC, with just one 25-basis point cut priced in for 2024.
The FOMC also announced that it would begin to taper its quantitative tightening program in June by “reducing the monthly redemption cap on Treasury securities from $60 billion to $25 billion.”
- ◦Financing
- ◦Economy
