Treasury

Fed holds the course

The Fed kept interest rates untouched for its fourth straight meeting.
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On Wednesday, the Fed opted to hold interest rates steady for its fourth meeting in a row. The federal funds target rate has remained between 5.25 and 5.5 percent since it was last raised in July 2023.

But Fed Chair Jerome Powell put a damper on hopes that the agency would start cutting rates during its next meeting in March.

“I don’t think it’s likely that the committee will reach a level of confidence by the time of the March meeting” to lower rates, he said during a press conference. The committee wanted to “see more good data” before it made such a decision, he added. (Or, as Comerica Bank chief economist Bill Adams colorfully told CNBC, “The Fed will wait to pull the trigger on rate cuts until they see the whites of 2% inflation’s eyes.”)

Stocks dipped after the announcement, with the S&P, Dow, and Nasdaq all taking a tumble, CNN reported.

But Powell did hint that cuts were on the horizon. “If the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint, at some point this year,” he said.

The Fed also removed language about “additional policy firming” from its statement, CNBC reported, suggesting that, at least for the time being, it’s taking hikes off the table. It sounded an optimistic note regarding the economy, stating that “the risks to achieving its employment and inflation goals are moving into better balance.”

News built for finance pros

CFO Brew helps finance pros navigate their roles with insights into risk management, compliance, and strategy through our newsletter, virtual events, and digital guides.