Fed holds interest rates, markets hardly react

In a highly anticipated move, the Federal Reserve chose to hold interest rates at their existing level on Wednesday following the Federal Open Market Committee two-day policy meeting. 

The rate hike pause marks the central bank’s sixth since consecutively raising interest rates from March 2022 to July 2023. Persistent inflation and a healthy labor market contributed to central bankers’ decision to hold rates, they said. 

“In considering any adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks,” Wednesday’s statement read. “The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%.” 

Central bankers will need to see more evidence that inflation is easing before cutting rates, Fed Chairman Jerome Powell said Wednesday during a press conference.

“The path forward is uncertain,” Powell said. 

“Although some measures of short-term inflation expectations have increased in recent months, longer-term inflation expectations appear to remain well anchored as reflected in a broad range of surveys of households, businesses and forecasters, as well as measures from financial markets,” he added.

Stocks and cryptocurrencies were little changed on the news. Bitcoin ( BTC ) traded sideways in the moments after the Fed released its statement at 2 pm ET, sitting around $57,786 at time of publication, per Coinbase. The largest cryptocurrency is down about 4% over the past 24 hours. 

Ether ( ETH ) similarly traded flat, hovering around $2,900 at time of publication – about 1% lower over 24 hours. 

The Nasdaq Composite and SP 500 indexes inched marginally higher on the news, managing to move just barely into the green after an otherwise disappointing trading session. 

Bitcoin has hovered below $60,000 since early Wednesday, a downward trend analysts say is poised to continue. 

“A break to the downside through $59,200 in BTC has led to an accelerated selloff and, barring an unforeseen catalyst, there seems little in the way of this market testing the [$53,000] area before a meaningful turnaround,” Mike Tauckus, head of trading and structuring at BitOoda, said. 

Markets on Wednesday expected about a 9% chance a rate cut will come in June, according to data from CME Group.

Updated May 1, 2024 at 2:37 pm ET: Added statement from Fed Chair Jerome Powell.

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