Fed Makes Interest Rate Decision Amid ‘Elevated Uncertainty’
As the market expected, the Federal Reserve left the federal funds rate unchanged following its latest policy meeting.
As we can see below, the policy statement, like the last one, was succinct and that means we and the rest of the market will looking for any clues amid what are likely to be sparse comments from Fed Chair Warsh at the soon-to-follow press conference. In our view, his tone will influence the market and its expectations, which also means the new chair could look to use the words he does share to influence the market more than Fed policy.
The market’s reaction is a sigh of relief, and that is helping the averages claw back some of Wednesday’s earlier losses. Again, we’ll want to get through Warsh’s presser, but also quarterly results after Wednesday’s market close from Microsoft ($MSFT) and Meta ($META), and to gauge the net reaction relative to key technical levels for the S&P 500 and the Nasdaq Composite.
Now, while we wait for Warsh, here is the Fed’s policy statement shared at 2 p.m. ET today:
The Federal Open Market Committee approved the following statement for release by a 9 – 3 vote:
The Committee decided to maintain the target range for the federal funds rate at 3-1/2 to 3-3/4 percent, in support of the Federal Reserve’s dual mandate. The Committee is continuing its policy of maintaining ample reserves in the banking system.
Economic activity is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East. Productivity growth and capital investment are strong. Job gains have kept pace with the workforce, and the unemployment rate has changed little.
Inflation remains elevated relative to the Committee’s 2 percent goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy. The Committee will deliver price stability.
Voting against the monetary policy action were Beth M. Hammack, Neel Kashkari, and Lorie K. Logan, who preferred to raise the target range for the federal funds rate by 1/4 percentage point at this meeting.
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At the time of publication, TheStreet Pro was long META and MSFT.
