The US Federal Reserve decided to keep the policy rate unchanged in line with market expectations. In the statement, it was stated that the federal funds interest rate will continue to be kept within the current range of 3.50% and 3.75%. This decision means that there is no change in the interest rate for the fourth consecutive time. Fed officials are trying to balance the threat of persistent inflation with slowing economic growth.
Differences in decision and votes
Four different opinions attracted attention in the interest rate decision: Board Member Stephen Mirran was in favor of reducing the interest rate by 25 basis points. Others advocated keeping interest rates at the current level but removing the language regarding the expectation of interest rate cuts from the text. This attitude of Beth Hammack, Neel Kashkari and Lorie Logan showed that there was a serious difference of opinion in the board regarding the interest rate reduction.
“The Committee will carefully review incoming data, the evolving outlook, and balancing risks as it evaluates the scope and timing of additional adjustments to the federal funds rate target band.”
Current situation in the markets
Following the decision, there were slight declines in the cryptocurrency market and stocks. Bitcoin is down about 0.5% in the last 24 hours and is trading just below $76,000. CryptoAppsy According to data, the price of bitcoin remained close to this level. There were also losses in US stock markets; Nasdaq index decreased by 0.35%. There was an increase in bond yields; The two-year US Treasury bond yield increased by 9 basis points to 3.93%, and the 10-year yield increased by 5 basis points to 4.40%.
Changes and effects in FED management
Today’s meeting stood out as the last FED meeting chaired by Jerome Powell. Powell’s term ends May 15 and is set to be replaced by Kevin Warsh, who passed a vote in the Senate Banking Committee. The fact that three members took a harsh stance on interest rate cuts indicated that the new president may face difficulties in reducing interest rates.
Investors will now keep an eye on Powell’s post-meeting press conference. Here, clues regarding monetary policy steps will be sought. Market players are interested in the road map to be followed in the coming period and how to manage differences of opinion.
On the other hand, the decline in hopes for permanent peace between the USA and Iran and the resurgence of geopolitical risks pushed oil prices up. West Texas Intermediate crude oil (WTI) approached the highest levels after the last war, reaching the limit of $ 105 per barrel.
The increase in energy prices both causes headline inflation to rise and may lead to a slowdown in economic activities. It is wondered what kind of priority the FED will determine between price stability and economic growth targets.
