FOMC Stands Pat on Interest Rates, Focus Now on June Meeting
$DIA, $SPY, $QQQ, $VXX
The Fed policy makers held interest rates steady Wednesday and expressed confidence that a recent rise in inflation to near the central bank’s 2% target would be sustained, leaving it on track to raise borrowing costs in June.
The Fed’s rate-setting committee also downplayed a recent slowdown in economic and job growth, saying that activity had been expanding at a moderate rate and job gains, on average, had been strong in recent months.
In a statement following the end of a 2-day policy meeting, the Fed said inflation had “moved close” to its target and that “on a 12-month basis is expected to run near the Committee’s symmetric 2 percent objective over the medium term.”
The FOMC’s decision to leave its benchmark overnight lending rate in a target range of between 1.50 percent and 1.75% was unanimous.
Investors ruled out another increase at this meeting, as the FOMC raised rates in March.
The Fed’s overall confidence in the economic outlook was also highlighted by its assertion that business fixed investment had continued to grow strongly. It added that risks to the outlook appear roughly balanced, removing a previous reference to “near-term risks.”
Fed Chairman Jerome Powell has maintained that the central bank will pursue a middle-of-the-road approach to monetary policy, continuing to gradually lift rates in the face of a robust economy that had yet to spark a jump in inflation.
But data released Monday showed that price gains are now effectively at the Fed’s 2% target after years of falling short of that mark.
The Fed’s preferred measure of inflation rose 1.9% in the 12 months through March, the biggest increase since February 2017, after increasing 1.6% in the year through February, the US Commerce Department reported.
Fed policymakers had anticipated the rise and have stressed that their 2% target is not a ceiling.
The FOMC currently forecasts another 2 rate rises this year. Investors expect a rate hike at the Fed’s next policy meeting on 12-13 June.
Wednesday, the major US stock market indexes finished at: DJIA -174.07 at 23924.98, NAS Comp -29.81 at 7100.90, S&P 500 -19.13 at 2635.67
Volume: Trade on the NYSE came in at 916-M/shares exchanged
- NAS Comp +2.9% YTD
- Russell 2000 +1.3% YTD
- S&P 500 -1.4% YTD
- DJIA -3.2% YTD
HeffX-LTN’s Market Indexes Technical Analysis
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