US Federal Reserve decided to hold rates unchanged at 4.5% in line with 4.5% projected on Wall Street. Indices on Wall Street gain after the decision; US100 rises 1%.
- Fed Median Rate forecast: 3% vs 3.125% exp. and 3% previously
- Fed Median Rate forecast (1yr): 3.375% vs 3.375% exp. and 3.875% previously
- Fed Median Rate forecast (2yr): 3.125% vs 3.125% exp. and 3.375% previously
Fed signals that beginning in April Fed will slow pace of balance sheet runoff. Monthly Treasury redemption cap will decline to $5 billion from $25 billion; monthly redemption cap on mortgage-backed securities is unchanged at $35 billion. Fed vote on policy included one dissent from Christopher Waller, who supported no change on policy rate but preferred no change to balance sheet runoff. Median view of Fed Funds Rate at end-2025 3.9% vs 3.9% previously. Fed officials' median view of Fed Funds Rate in longer run 3.0% (prev 3.0 %)
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Create account Try a demo Download mobile app Download mobile appFOMC median forecast shows 50 BPS of rate cuts in 2025 to 3.9% and 50 BPS more in 2026. . Uncertainty around economic outlook has increased. Fed reduced 2025 growth projection and marks up inflation. Now the Fed median forecast shows 2025 GDP at 1.7%, vs 2.1% in December, while median 2025 unemployment projection rises to 4.4%. Fed projections show 4 of 19 officials see no cuts in 2025, 4 see one cut, 9 see 2 cuts, 2 see as much as 3 cuts.
Overall, the market reaction shows that the FOMC statement is dovish. Futures price in more than 62% chance for Fed rate cuts in June vs 57% probability before. Now Wall Street await for the chair Powell speech scheduled at 6:30 PM GMT.
Source: xStation5
