FOMC Keeps Interest Rate Steady
In its recent meeting on September 20, 2023, the Federal Open Market Committee (FOMC) decided to maintain the benchmark federal funds rate at its current target rate of 5.25-5.50%. The committee’s focus is on achieving a 2% inflation target while also considering employment figures.
Fed Officials Assess Inflation and Unemployment
According to the Fed officials, inflation remains high while the unemployment rate remains low. The committee will carefully evaluate additional information and its implications for monetary policy in order to determine future interest rates. The FOMC reiterates its commitment to bringing inflation back to its desired 2% target.
Market Reaction and Powell’s Speech
Market participants have interpreted this decision as a “hawkish pause” from the FOMC, according to John Authers, senior editor at Bloomberg. The initial reaction of the Bitcoin price to the announcement remained flat. Jerome H. Powell, Chair of the US Federal Reserve, will deliver a post-FOMC speech in a live press conference where he may provide insight into the Fed’s outlook on inflation targets for upcoming meetings.
Possible Delay in Rate Cuts
The FOMC statement suggests a slightly hawkish stance from Fed officials, indicating that additional policy firming may be considered to reach the inflation target. The committee will assess the cumulative impact of previous tightening measures on economic activity and incoming inflation data before making further decisions on policy tightening. This raises the question of whether rate cuts will be delayed until sometime in 2024.
Hot Take: Hawkish Pause Extends Rate Cut Possibility
The FOMC’s decision to maintain interest rates at their current level suggests that rate cuts may be further delayed. With a focus on achieving the 2% inflation target, the committee will carefully evaluate economic data and policy implications. Market participants view this as a “hawkish pause” from the Fed, and Jerome H. Powell’s upcoming speech may provide more insight into the central bank’s stance on inflation targets. As a result, the possibility of rate cuts in 2024 remains uncertain.
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