Statement kickstarts a big year for the central bank
The Federal Reserve has held its key interest rate steady for a fourth consecutive decision, but steered clear of a timeline for possible rate cuts as it continues to assess the national economic landscape.
The Fed’s Wednesday announcement (January 31) following its first policy meeting of the year sees rates stay in a range of 5.25% to 5.5%, with the decision coming as little surprise to markets and investors alike.
That means the key rate remains at a 22-year high – but has not increased since July, an indication that the Fed is encouraged on its progress in the inflation fight while also keeping its options open in the coming months.
Markets are widely expecting the Fed to pivot towards rate cuts at some point in 2024, a conversation the central bank seems anxious to avoid at present amid signs of labor market resiliency and robust economic growth.
While the US’s overall inflation rate ticked upwards to 3.4% in December, the Fed’s preferred measure of underlying inflation – which excludes food and energy – sat below 2% for a second straight month, raising hopes that its target can be achieved without piloting the economy into a recession.
Bureau of Economic Analysis figures released last week showed that the economy grew at an annualized pace of 3.3% in the fourth quarter of 2023, surging past expectations of 2% growth for Q4.
WATCH LIVE TODAY: Press conference with #FOMC Chair Powell at 2:30 p.m. ET: https://t.co/1uJrua5Yifhttps://t.co/FJa6TblbC1 pic.twitter.com/ss35uWzvmZ
— Federal Reserve (@federalreserve) January 31, 2024
When might the Fed signal rate cuts are on the way?
Experts had seen little chance that the Fed would set out a roadmap for rate cuts in today’s announcement, with Bloomberg Economics analysts Anna Wong and Stuart Paul indicating before the statement that if the Fed intends to slash rates at its next announcement, that communication will likely arrive “in late February or early March.”
The Federal Open Market Committee (FOMC) is scheduled to meet for its next interest rate decision on March 19-20, an announcement that will be accompanied by the first of four Summaries of Economic Projections of the year.
Stay updated with the freshest mortgage news. Get exclusive interviews, breaking news, and industry events in your inbox, and always be the first to know by subscribing to our FREE daily newsletter.
