RATE CUT UNLIKELY. US Federal Reserve Chair Jerome Powell on Wednesday (May 1, 2024) discounted the possibility of a rate reduction in the next policy meeting given that inflation remains way above the central bank’s 2 percent target. The Fed again kept its key rates between 5.25 to 5.5 percent on Wednesday, which markets widely expected. (Photo by Anadolu)
ISTANBUL – Federal Reserve Chair Jerome Powell on Wednesday said the central bank is "unlikely" to make an interest rate increase despite inflation still hovering above its 2 percent target.
"It's unlikely that the next policy rate move will be a hike," he said in a post-meeting press conference after the Fed kept the federal funds rate unchanged in the 5.25 percent to 5.5 percent target range, as widely expected, which is the highest level in 23 years.
"We need to see persuasive evidence that our policy stance is not sufficiently restrictive to bring inflation sustainably down to 2 percent over time," Powell said. "That’s not what we think we’re seeing."
Consumer inflation annually rose 3.5 percent in March, above market expectations, still above the Fed's target of 2 percent.
Powell stressed that Federal Open Market Committee (FOMC) members want to see "greater confidence" that inflation is falling toward the 2 percent target.
"So far this year, the (macroeconomic) data have not given us that greater confidence,” he said. "It is likely that gaining such greater confidence will take longer than previously expected."
"We are prepared to maintain the current target federal funds rate for as long as appropriate," Powell added.
The probability of a Fed rate cut of 25 basis points at the Fed’s June meeting stood at just 9 percent as of Wednesday, according to the FedWatch Tool provided by the US-based Chicago Mercantile Exchange Group.
The probability of a cut of 25 basis points at the July meeting is 26 percent and 42 percent for the September meeting.
Most analysts believe that the Fed's first interest rate cut could be delayed to November, or even December this year. (Anadolu)
