The Federal Reserve decided to hold interest rates constant during its policy-setting committee meeting on Wednesday, guiding in the year's wait-and-see approach. The largely anticipated decision keeps the target range for the federal funds rate at 5.25%-5.50%.
While the Federal Open Market Committee's statement hinted to a possible hike in interest rates, policymakers avoided discussing precise cuts. In a post-meeting press conference, Federal Reserve Chairman Jerome Powell reiterated concerns about "persistent inflation" while downplaying the chances of rate reduction in March.
Despite market expectations for rate decreases, the Federal Reserve is unlikely to relax monetary policy at its next committee meeting in March. Powell expressed doubts that the committee would reach the confidence level required for a rate drop in March.
Mr. Powell said, "I will tell you that I don't think the Committee will have reached the level of confidence by the time of the March meeting that it's time to raise rates." He stated that a rate drop in March is "not the most likely outcome" or based on a "baseline case."
Market expectations for rate reduction increased by over 65% in the hours immediately up to the announcement. However, following the Federal Open Market Committee's most recent policy statement, which somewhat reduced the chance of rate reduction, the probability fell to roughly 46%, according to the CME FedWatch Tool.
In summary, despite initial enthusiasm for rate cuts, the Federal Reserve maintains a cautious approach, and Following Chairman Jerome Powell's remarks, the chance of rate reduction in March appears to have minimied. The central bank intends to keep interest rates unchanged in the short future.
