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Fed meeting January 31st: no news, rates remain unchanged

First meeting of the year for the Federal Reserve but with no substantial news.
As widely predicted on the eve, president Jerome Powell & Co decided to leave interest rates unchanged at 5.20-5.50%.
Any new decision is expected in March where presumably a slow and gradual decline in rates could begin and therefore the end of a restrictive policy adopted to keep inflation at bay and bring it back to the 2% range.
As can be read from the press release published recently by the Federal Reserve, inflation has eased in the last year but remains high.
The committee's objective remains to increase employment (which has been growing at a moderate pace since last year) and bring inflation back to the maximum range of 2%.
The economic prospects remain uncertain, especially regarding the risks of inflation and for this reason interest rates remain unchanged in January as well.
“The committee believes that it will not be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably towards 2%,” the published statement read.
The committee will carefully evaluate incoming updated data on the economic and monetary situation to better understand the evolution of the outlook and risks.
“The Committee would be prepared to appropriately modify the direction of monetary policy if risks emerged that could prevent the achievement of the Committee's objectives.” In short, it was now well known that rates had remained unchanged at the end of the January meeting.
The good news for investors and markets came in December with the decision not to further increase restrictive monetary policy.
A first step also confirmed by the first meeting in 2024.
Now the big question everyone is asking is; When will rates start to fall? Uncertainty still reigns over this forecast.
If the incoming economic data are comforting, several analysts have predicted a start to the decline in interest rates in the spring, therefore either as early as the next meeting in March or the following one.
According to Bloomberg Economics, there is every reason for the Fed to take measures to cut rates in the coming months.
“We expect the Fed to begin lowering the federal funds rate target range in March in an effort to maintain a soft landing.” read also Fed meeting today, rate forecasts and Powell's words

Author: A.W.M.

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