The Fed maintained rates, but warned about the “lack of progress” in lowering inflation

The United States Federal Reserve kept the interest rates stable in the range of 5.25%-5.50% this Wednesday, just as the market expected. Furthermore, he noted that he continues to lean towards a eventual reduction in borrowing costsbut warned about recent disappointing inflation data and suggested possible stagnation in the movement toward greater balance in the economy.

The president of the Fed, Jerome Powellhighlighted at the press conference that, Although “inflation has slowed substantially in the last year,” it “is still very high.”

After two days of meeting, the Federal Reserve’s monetary policy statement issued at the end of the meeting, kept intact key elements of its economic assessment and guidancenoting that “inflation has decreased” over the last year, and framing his debate on the interest rates around the conditions under which borrowing costs can be reduced.

“The (Federal Open Market Committee) does not expect it to be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%.“the Fed insisted in a statement approved unanimously.

However, he clarified that the next movement in rates will be downwards, which continues to leave doubts about the possible rate cut. Also, Fed officials emphasized their concern that the first months of 2024 have done little to generate the confidence they seek in the decrease in inflation.

“In recent months, there has been a lack of further progress towards the Committee’s 2% inflation target”the Fed said in the statement, while in the previous one it had suggested an improvement in dynamics, stating that the risks to the economy “they are moving towards a better balance”.

The official reference interest rate remained in the current range again, after the first cuts were planned by the market for March, but due to the lack of slowdown in inflation they have been postponed. At that time, Inflation data showed the path to the 2% target had stalled.

In March, the personal consumption expenditures price index, the Fed’s preferred inflation gauge, rose 2.7% year-over-year.

Wall Street turns around and rises after Federal Reserve meeting

“Beyond the fact that the Fed would continue to be more inclined towards the higher for longer due to the resilience of inflation, Concerns about signs of a slowdown in the economy were interpreted positively by Wall Street“he explained to Ambit the Economist Gustavo Quintanawho also highlighted the decline in the yield curve.

After the Fed meeting report, Wall Street turns around and rises: the Dow Jones Industrial Average climbs 499.87 points, or 1.3%, to 38,315.79 units; he S&P 500 advances 51.60 points, or 1%, to 5,087.29 units; and the Nasdaq Composite scale 252.43 points, or 1.5%, to 15,910.26 units.

For this reason, the economist also highlighted that the tone of the Federal Reserve “it’s sounding less hawkish than what was feared” and this is responded to by the rise in the international market, although it is still very volatile.