US Fed Meeting 2024: Fed keeps interest rates steady as Powell says ‘path forward is still uncertain’

Powell-led FOMC is now set to meet again on March 19-20. This marks the period during which they will engage in discussions for the upcoming round of policy decisions.

Federal Reserve Chair Jerome Powell said rent reductions are coming - although they haven't appeared in the government's inflation statistics.

“We know is it is coming,’’ he said. “It’s just a question of when and how big it will be. That is in everyone’s forecast … so that will help’’ in the fight against inflation.

Fed meet live: Powell stated to reporters on Wednesday that it is unlikely that interest rate reductions will start in March.

"Based on the meeting today, I would tell you that I don't think it is likely that the Committee will reach a level of confidence by the time of the March meeting to identify March as the time to do that, but that is to be seen," Powell said. "It is probably not the most likely case, or what we would call the base case."

The Dow dropped by 0.6%, or 211 points. The Nasdaq Composite fell 1.8% while the S&P 500 fell 1.2%.

Fed meet live: While investors had been expecting a rate cut or the start of a rate-cutting cycle at the March meeting, Chair Powell seemed doubtful about the timing of that announcement on Wednesday afternoon.

“Based on the meeting today, I would tell you that I don’t think it’s likely that the committee will reach a level of confidence by the time of the March meeting to identify March is the time to do that,” he said. “But that’s to be seen.”

″[March is] probably not the most likely case or what we would call the base case,” he added.

Fed meet live: Nearly all members of the US central bank's rate-setting committee support lowering interest rates this year, Powell said, after a meeting that kept rates unchanged but hinted of cuts ahead.

"But the timing of that is going to be linked to our gaining confidence that inflation is on a sustainable path down to two percent," Powell told a press conference.

Fed meet live: The central bank may need more signs that inflation is easing before it begins “dialing back the restrictive level” and cutting rates, said Powell during a press conference Wednesday.

“The median participant wrote down three rate cuts this year, but I think to get to that place where we feel comfortable starting the process, we need some confirmation that inflation is in fact coming down sustainably to 2%,” he said.

According to Chair Jerome Powell, the Federal Reserve is keeping options open while evaluating the future course of interest rates and when to enact reductions.

“Of course, if labor, if inflation were to surprise by moving back up, we would have to respond to that and that would be a surprise at this point,” he said. “But I have to tell you that’s why we keep our options open here and why we’re not rushing.”

While markets have digested six months of good data, uncertainties linger and risks could reaccelerate inflation, he added.

Fed meet live: Fed Chair Jerome Powell said on Wednesday that the FOMC has not yet started to consider cutting rates.

“We’re not really at that stage, there was no proposal to cut rates. ... We weren’t actively considering moving the federal funds rate down,” he said.

Fed meet live: “We want to see more good data,” Powell said in his post-meeting press conference. “It’s not that we’re looking for better data, we’re looking for a continuation of the good data we’ve been seeing.”

“It gives us confidence that we’re on a path, a sustainable path, to 2% inflation,” Powell added.

Fed meet live: The FOMC used its first meeting of the year to reaffirm its long-term goals and monetary policy strategy, including its commitment to a two per cent average inflation target. Among other changes to the statement, the committee omitted language that had been included in some form since last March, calling the banking system “sound and resilient" and warning that tighter credit conditions were likely to weigh on the economy.

Fed meet live: Powell stated in his prepared remarks that it is likely the Fed has raised interest rates as far as it has to in this cycle of economic tightening. However, he stated such cuts might not be coming soon.

“We believe that our policy rate is likely at its peak for this tightening cycle and that if the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year,” Powell said during the conference.

“But the economy has surprised forecasters in many ways since the pandemic and ongoing progress toward our 2% inflation objective is not assured,” he added. “The economic outlook is uncertain and we remain highly attentive to inflation risks. We are prepared to maintain the current target range for the federal funds rate for longer if appropriate.”

Fed meet live: Inflation has decreased recently, according to Powell, but not by enough to persuade the central bank to lower interest rates.

“The lower inflation readings over the second half of last year are welcome, but we will need to see continuing evidence to build confidence that inflation is moving down sustainably to our goal,” Powell said.

Powell further said that the US economy has made some good progress, with inflation easing from its highs without signs of increased unemployment. Still, there is work to be done, he said.

“Inflation is still too high, ongoing progress in bringing it down is not assured and the path forward is uncertain," Powell said, according to CNBC. “I want to assure the American people we are fully committed to returning inflation to our two per cent goal,"

Fed meet live: Responding to the Federal Reserve’s decision on Wednesday, Rajeev Sharma, managing director of fixed income at Key Bank, said the Fed is likely “to wait a bit longer to cut rates than the market is currently anticipating.’’

Prior to the meeting on Wednesday, the majority of investors anticipated a rate reduction at the central bank's upcoming meeting in March. However, as of right now, Sharma projects that "the first rate cut would not come before May."

Fed meet live: “Recent indicators suggest that economic activity has been expanding at a solid pace,” the today's statement reads.

“Job gains have moderated since early last year but remain strong, and the unemployment rate has remained low,” it continues, before adding the line likely to dominate news coverage: “Inflation has eased over the past year but remains elevated.” Click here

Fed meet live: It’s still unclear if the Federal Reserve will move to cut rates in March, said Ian Lyngen, head of U.S. rates at BMO, after Fed's Wednesday’s statement.

“While this doesn’t take a March cut off the table completely, it also isn’t an endorsement of a move on March 20th,” he said in a note.

Fed meet live: The three major US stock indexes were already weighed down by weakness in tech and tech-adjacent megacap stocks the day after disappointing Alphabet results. All three turned lower ahead of Fed Chair Jerome Powell's Q&A session, expected to begin shortly. At 02:10 p.m. (EST), the Dow Jones Industrial Average fell 61.72 points, or 0.16 per cent , to 38,405.59, the S&P 500 lost 46.13 points, or 0.94 per cent, to 4,878.84 and the Nasdaq Composite lost 222.88 points, or 1.44 per cent, to 15,287.02.

Fed meet live: The Federal Reserve held interest rates steady for the fourth straight meeting and signaled its openness to cutting them, though not necessarily right away.

In a statement issued after their two-day meeting, Fed officials dropped their previous assertion that a rate hike was possible and instead adopted a more even-handed assessment of the future policy path.

“The Committee judges that the risks to achieving its employment and inflation goals are moving into better balance," the central bank’s policy-making Federal Open Market Committee said Wednesday.

“In considering any adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks."

But in a sign that officials are not in a rush to reduce rates, the FOMC also said it “does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward two per cent."

The dollar index pared losses Wednesday after the Federal Reserve left interest rates unchanged and dropped a longstanding reference to possible further hikes in borrowing costs. The dollar index was last flat on the day at 103.39. The euro was last down 0.16 per cent on the day at $1.08275. The greenback pared losses against the yen and was last down 0.66 per cent on the day at 146.72 yen.

According to David Kelly, chief global strategist at JPMorgan Asset Management, the Federal Reserve has laid the groundwork for rate reductions beginning in June.

“It sounds to me like June, September, December is what they are thinking — three rate cuts this year —provided the economy keeps growing,” Kelly said in an interview with CNBC following the release of the Federal Reserve’s statement.

“There doesn’t seem to be, at the moment, a sign that the U.S. economy is going to keel over and fall into recession any time soon,” he added.

Fed meet live: Indicating that they are not yet prepared to lower interest rates, policymakers believe that a move won't be appropriate until they have greater confidence that "inflation is moving sustainably toward two percent" at their next meeting in March.

With a maximum of $60 billion in Treasury securities and $35 billion in mortgage-backed securities sliding off the balance sheet each month, the Fed continues its quantitative tightening program. The statement makes no mention of any changes to the program.

Fed meet live: The Fed has a dual mandate to keep both inflation and the unemployment rate low, and has been heavily focused on bringing high inflation back down towards its long-term target of two per cent. The US central bank confirmed in a statement that it was holding its benchmark lending rate steady at a 23-year high between 5.25 per cent and 5.50 per cent.

Fed meet live: Central bank policymakers said that they aren’t yet ready to start cutting rates, according to their two-day meeting statement.

“The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent,” the statement said.

Few meet live: The Federal Reserve has left interest rates unchanged in January. It’s the fourth consecutive time that the central bank has decided to keep steady on rate policy.

The fed funds rate remains at a range of 5.25% to 5.5% as the US central bank confirmed said it is unlikely to start cutting rates without "greater confidence" that inflation is moving "sustainably" towards its long-term two per cent target. The central bank added that the "risks to achieving its employment and inflation goals are moving into better balance."

Fed meet live: A recent study conducted by Wolters Kluwer Blue Chip Economic Indicators revealed that forecasters anticipate 1.6% growth in the GDP this year.

That kind of growth likely means the Fed will have achieved a coveted “soft landing” by restraining the economy enough to tamp down inflation without triggering a recession.

Fed meet live: The Federal Open Market Committee will next meet on March 19 and 20.

Here are all of the upcoming Fed meetings planned for 2024

March 19-20

April 30- May 1

June 11-12

July 30-31

Sept. 17-18

Nov. 6-7

Dec. 17-18