Fed holds rates at 3.5-3.75% and strips cut-bias language
The Fed has held interest rates steady at 3.5-3.75%, removing language that hinted at potential rate cuts. This move is seen as a shift in communication style, with the Fed aiming to preserve optionality by keeping markets guessing.
The US inflation rate is currently at 4.2%, above the 2% target. The Fed’s new approach has historical precedent, with past chairs opting for a quieter approach to communication.
The impact of this new style is still being priced in by markets, with some pundits viewing it as a deliberate attempt to reduce forward guidance and keep markets on their toes.