Here's a concise article summarizing key points from a recent Federal Open Market Committee (FOMC) meeting:
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** its latest FOMC meeting, maintaining the benchmark interest rate at **5.25%-5.50%** for the seventh consecutive meeting. While inflation remains elevated, Chair Jerome Powell signaled growing confidence in the disinflationary trend, hinting at potential policy adjustments later this year.
Key Takeaways:
1. **"Higher for Longer" Persists:** Rates remain at a 23-year high as the Fed seeks "greater confidence" inflation is sustainably moving toward its 2% target.
2. **Slower Balance Sheet Runoff (QT):** Starting in July, the Fed will reduce the pace of its Treasury securities roll-off from $60 billion to $25 billion monthly—a move to ease liquidity pressure without halting contraction.
3. **Dovish Shift in Projections:** Updated "dot plots" revealed **one projected rate cut in 2024** (down from three in March), but projections now show **four cuts in 2025** (up from three), reflecting cautious optimism.
4. **Inflation Progress Noted:** Powell acknowledged "modest further progress" on inflation but emphasized the need for sustained improvement, particularly in services.
5. **Labor Market Resilience:** The Fed sees the jobs market cooling gradually but remains strong overall, reducing urgency for immediate cuts.
Market Reaction:
* Stocks rose moderately on the QT taper and Powell’s acknowledgment of disinflation.
* Treasury yields dipped slightly, particularly in the 2-10 year segment.
* Traders increased bets on a **September rate cut** (now ~65% probability).
Outlook:
The Fed remains data-dependent. While a July cut is highly unlikely, **September is in play** if upcoming inflation (CPI, PCE) and employment reports align with the Fed’s evolving outlook. Patience remains the watchword, but the pivot discussion is now firmly underway.
