In a move widely anticipated by investors, the Federal Open Market Committee (FOMC) maintained interest rates within the 5.25% to 5.50% range this Wednesday. This decision aligns with the consensus view among market participants and follows the FOMC’s “Dot-Plot” report projections, which indicate an expectation for three 25 basis-point cuts throughout the year.

Shortly after the FOMC’s announcement, major stock indices saw an uptick, with the Dow Jones and S&P 500 increasing by 0.32% and 0.28%, respectively. Contrarily, the Nasdaq 100 experienced a slight dip of 0.02%. Concurrently, yields on two-year and ten-year Treasury notes declined by 4.6 and 1.4 basis points, respectively.

The FOMC’s post-decision statement acknowledged a easing in the price trajectory throughout 2023, though it noted that price levels remain “elevated.” The committee also expressed that it “does not expect it to be appropriate” to lower the target rate until it has greater confidence that inflation is sustainably moving towards its 2.0% target.

Significantly, the committee revised a section of the statement to highlight that job creation remains “strong” in the economic activity, updating January’s observation that job creation had slowed since the end of 2023, despite remaining “strong.”

The FOMC views the risks to achieving its monetary policy objectives—employment and inflation—as “evolving towards a better balance.” Moreover, the committee finds the economic outlook “uncertain” and remains “highly attentive” to inflationary risks.

According to the FOMC, economic activity has been expanding at a “solid” pace. Today’s unanimous decision marks the fifth consecutive time the Fed has kept interest rates unchanged, and the sixth since the beginning of this monetary tightening cycle in March 2022. This period represents the longest tightening cycle since 1980 when the Fed induced a recession to control inflation in the U.S., with interest rates at their highest level since 2001.

Fed Chair Jerome Powell is scheduled to address the press, which will provide further insights into the Fed’s current outlook and future monetary policy direction. Traders and investors will be closely analyzing Powell’s remarks for any indications of upcoming policy shifts or economic assessments that could influence market dynamics.

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