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Fed leaves rates unchanged, but signals no rush to cut amid 'elevated' inflation

Published 01/31/2024, 02:03 PM
Updated 01/31/2024, 05:21 PM
© Reuters -- The Federal Reserve left interest rates unchanged Wednesday, though signaled no rush to cut rates as more confidence was needed that "elevated" inflation continues to slow toward target at a time of "solid" economic growth and strong job gains.

Fed sees rates higher for longer as inflation battle continues; Powell shoots down March cut hopes

"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 Fed said in its monetary policy statement on Wednesday. 

Fed chairman Jerome Powell dealt a further blow to a March rate cut, saying it was unlikely the level of confidence would have improved enough by March to cut rates.

"Based on the meeting today, 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 as the time to do that," Powell said in response to a question about whether the Fed could cut in March. The Fed chief stressed, however, that future policy decisions would depend on incoming data.   

While the odds of a March cut were dealt a blow, falling to about 30% from about 65% prior to the statement, some economists continued to keep hopes of an earlier rate cut alive. 

"[W]e are maintaining our call for a 25 basis point rate cut in March," Jefferies said Wednesday, though said that should labor market data due Friday come in stronger than expected, "we might be inclined to push the forecast out to May."

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Fed's tightening bias in rearview mirror 

While there isn't a pressing need to rush to cut rates, the statement offered clues that the Fed has shifted to less hawkish stance as prior remarks that were present in Fed's December statement referring to “additional policy firming,” were removed. 

"FOMC members no longer have a tightening bias," Morgan Stanley said Wednesday, adding that a June cut remains in play. 

"We continue to expect the first rate cut in June, and four 25bp cuts in total this year followed by an additional 200bp in 2025," it added. That is above the Fed's December projection for three rate cuts.

Soft landing gets boost as Fed sees more balanced risks to inflation, labor market goals  

The Federal Open Market Committee, or FOMC, left its benchmark rate in a range of 5.25% to 5.50%.

It was the fifth-straight meeting that the FOMC decided to keep monetary policy steady as recent economic data --- showing slowing inflation, but a still strong labor market -- has fueled expectations that the Fed could deliver a soft landing by reining in inflation to its 2% target without causing a major spike in unemployment.

The Fed appeared to be endorsing view, acknowledging in the statement that "risks to achieving its employment and inflation goals are moving into better balance."

The latest reading on core personal consumption expenditure prices, the Fed's preferred measure of inflation, fell below 3% on an annualized basis in December for the first time since April 2021. But while the Fed welcomed the slowdown in inflation over the past year, the pace remains "elevated."

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Latest comments

History tells us that the first rate cut Fed makes in a tightening cycle, is a mistake. That should be the ideal time to get out from equities & move to secure bonds.
...and stocks are already back up tonight.. despite no cuts and no rush to cut message  Stocks soared almost 5K on rate cut hopes over the past 3 months ] Now they're going up on no rate cut hopes. Absolute managed farce!
ya everything is faked, just a topic, but honestly I like this
If you were expecting a rate cut in March, I have some ocean front property in Arizona that I'm sure you'll wanna buy
Financial institutions face increasing regulatory pressure.
Remember when they said inflation was transitory? We place to much faith in out central planners.
Y'all put too much faith in what you think they should do instead of what they will actually do. Any unbiased view of the data said that rate cuts weren't coming in March. Too many traders have little to no knowledge of economics
Inflation rate was >9% a few months ago.
Inflation rate was >9% a few months ago.  "Examples of transitory inflation include the inflationary periods during and immediately following both World Wars"  --, Nov 2022.  Guess what, Russia has been warring against Ukraine, and Gaza started a war against Israel more recently.
Hell FED
The Fed's won't admit that the rate is at a comfortable and affordable rate for the working people, for the banks (who would like the rates even higher, actually), and for people with savings accounts.
Taylor, the rates are substantially lower for people without the awful level of credit you seem to have. Auto loans are 4.5-6% for most people. Interest rates for mortgages aren't above 7.5% at the very highest for anyone but you. Stop trying to buy a house in the middle of a medium sized city with poor credit.
Inflation rate was >9% a few months ago.  "Examples of transitory inflation include the inflationary periods during and immediately following both World Wars"  --, Nov 2022.  Guess what, Russia has been warring against Ukraine, and Gaza started a war against Israel more recently.
That's normal. What's not normal is super low mortgages and loans
cpe running at 2.9%. the same guy said it would need to cut rate as we approach 2% because it would be too late to cut if cpe is already at 2%.
Fed saying this for a while, i don’t understand why market or broker is so stupid thinking Fed cut rate before September 2024…. Rate cut won’t happened before Septmber.
Fed essentially kicking the proverbial can down the road.
The Fed uses monetary policy to affect employment rate.   Congress has not delegated to the Fed powers over things like minimum wage, union regulations, income tax/tariff rates, education/training, etc.
Yep, The Republicans have been giving away the taxpayer's money like candy.
  Both parties have.  See, I criticize the Dems when it's warranted!  ;-)
fed onlyngive you many hours to close your buy position 🤣
Krypto is the worst thing you can buy. It just enrich us dollars
Crypto is traded in other currencies, too.
FED is not finished yet robbing world economy
Every time a country defaults on its debt to US investors, the world robs from the US economy.
Won't be any rate cut this year. Get over it already.
Market is pricing in ~100% odds of at least 1 rate cut during/before the June 12th FOMC meeting.
It used to be March. LOL
GOLD -2003/-$1st. target 🎯, 1983/-$2nd. target 🎯, 1963/-$ 🎯
Better start buying physical gold to stash. The lies are about to be exposed soon.
Who stays solvent when the world no longer wants debt ridden dollars?
  I still want those dollars.   Anyone wanna trade their worthless dollars for by useful toilet paper?
* for my
The Fed cant cut rates… that would make them lower the rate on yhe Rrp ( a risk free place to put freashly printed cash off of underwater bank assets the Fed buys) . The banks leave it there while they search for higher yields, say bonds that have higher yiekds, or stocks!! The only way to keep this scam going is to offer higher and higher bond yields
Your post argues for tighter regulations to prevent banks from seeking higher yield and risking  another taxpayer-funded bailout.  Biden admin has been tightening after Trump had de-regulated.
Good thing OPEC+ is taking very good care of oil production and keeping everything in balance.
OPEC+ policy is designed to enable Russia war crimes.
How can someone say that economy is great? Do the buy food as we are?
I made great $ today.  More than enough for ramen for a year.  Aren't you up?
Tom, no one in power will say it out loud, but the poorest people don't matter to them. At all. In fact, having an indentured, debt-laden, uneducated workforce is extremely beneficial to the wealthy. It's not that they don't know, or eat, or buy things. It's that they quite literally do not care about you and they benefit from your suffering and desperation.
He just said if inflation goes below 2% he will have to do something about it, because he doesn't want inflation to go below 2%....... :)
I knew that before Powell said it.  The Fed doesn't want inflation to go below nor above 2% target.  It's called "target" for a reason.
Should've raised rates rather then kept it the same! Inflation is rising again! The economy is hurting right now! Wait til all the defaults crash the banks and this economy gets flushed down the toilet! We have the highest personal debt and government debt ever by far in this country and people are living check to check if they are lucky! The longer the put off the inevitable, the bigger the crash is going to be!
"Inflation is rising" is true the vast majority of the time.  Deflation/disinflation is rare.  Inflation rates have been in a tight range for > 1/2 year.  Raising rates now would cause the very problems you're warning about.
That's gonna cost Joe some votes.
There is less than ZERO chance the Fed will cut rates 5 or 6 times this year. This is what happens to rational thought when drugs are legalized.
Market hasn't been expecting "cut rates 5 or 6 times this year".
Cocaine is not legal.
"less than ZERO chance" doesn't exist
pure astrology. one has to feel sorry for the academic economists.
With the help of a good astrologer one can know how it’s going to end this year. Don’t mix entertainment with that ancient and respected science just because the entertainers have ruined its reputation.
Why would they cut rates when inflation has been trending up for the past 2 months and stock valuations are at the highest levels since 1999? If Fed were honest they would admit that a rate hike is much more likely than a rate drop right now. Biden admin has even been fudging employment numbers by expanding government employees more than any other administration in US history. They do not produce anything and just drain taxpayer money, which is why Biden admin has also had the worst return on debt vs GDP compared to any other point in US history. Interest on national debt is now over $1 trillion per year.
 Tears from people like you.
You are right about the Biden disaster, but you are thinking logically about what a Fed should do vs what a political Fed will do.
Exactly if FED does what Dylan says I will be the end of the of and era. That will happen sooner rather than later, when the bomb they made implodes
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