Fed Meeting Today: Live Analysis on Interest Rates, Powell Speech

Thanks for joining us. Here are five key takeaways from the FOMC interest rate decision and Federal Reserve Chair Jerome Powell’s press conference on Wendesday:

• The FOMC kept rates unchanged for a sixth straight meeting. Powell said it will take longer than expected to become confident about returning inflation to the Fed’s 2% goal, essentially ruling out a rate cut in the near term. “We can be patient,” he said. Importantly, his comments seemed to close the door on a rate hike as well.
• Monetary policy is restrictive now and over time sufficiently restrictive to return inflation to target, Powell said. He declined to estimate how likely it is there will be cuts this year, and added that policy needs more time to work. The data will be the key to when cuts do happen, the chair said.
• The FOMC is still aiming for a soft landing, saying risks to achieving employment and inflation goals “have moved toward better balance over the past year.” Powell said that, with inflation having fallen over the year, there is now a greater focus on the full-employment mandate. He said the Fed doesn’t target wages.
• The Fed announced that it will slow its pace of quantitative tightening beginning June 1, lowering the cap on the amount of Treasury securities rolling off the balance sheet by more than half, to $25 billion each month from $60 billion. Officials maintained the pace of runoff for mortgage-backed securities at a maximum of $35 billion a month. Powell said there is no signal here on policy.
• The S&P 500 rose 1%, erasing earlier losses. Treasuries also gained as the Fed agreed to slow the reduction in its bond portfolio. US two-year yields dropped below 5% as swap traders boosted their bets on rate cuts, projecting higher odds that the first move will happen in November, instead of December.