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PremiumUS Fed Meeting Outcome LIVE Updates: The US Federal Reserve announced its interest rate decision on Wednesday after a two-day Federal Open Market Committee (FOMC) meeting, leaving the benchmark interest rates unchanged at 5.25 per cent - 5.50 per cent for the seventh straight meeting, in line with Wall Street estimates.
The rate-setting panel ended its fourth policy-setting meeting of the year on June 12 and unanimously voted to hold the policy rate at the two decade high-mark and foresees only rate cut in 2024. The projections on rate cuts are data dependent. Fed policymakers frequently revise their plans for rate hikes or cuts, depending on how economic growth and inflation evolve over time. The Fed raised the US core inflation forecast for 2024 and held GDP projections at the previous levels.
US consumer prices were flat in May compared to April, slowing the annual rate of inflation to 3.3 per cent from 3.4 per cent. The core consumer price index (CPI) — which excludes food and energy costs — rose at a year-over-year rate of 3.4 per cent, the slowest pace in more than three years.
After raising the policy rate by 5.25 percentage points since March of 2022 in one of the swiftest Fed reactions to rising price pressures, the central bank has now kept the policy rate on hold since July 2023 to anchor in high inflation and bring it down consistently toward the two per cent target range.
Siddharth Chaudhary, Senior Fund Manager – Fixed Income, Bajaj Finserv Asset Management:
“Market will watch out for US CPI and FOMC outcome today. The current pricing by US Treasury curve suggests that bonds have priced in little less than 50bps cut by December 2024.
The Fed has maintained the projection of three 25 bps reductions for last six months now versus the markets which has lowered its expectation from around seven cuts in early this year in response to data surprises in US.
The market right now is also not pricing in any possibility of Fed pivoting to less than two cuts in this meeting for the rest of the year. This though is not base case but still remains a possibility in light of recent data".
US Fed chairman Jerome Powell-led FOMC will unveil fourth policy decision of 2024 later tonight. Wall Street analysts widely expect the central bank to leave the benchmark interest rates unchanged at 5.25 per cent - 5.50 per cent for the seventh straight meeting.
