FOMC Update
January 31, 2024
As expected, the FOMC did not change its benchmark rate range from 5.25%-5.50% for the fourth consecutive meeting. The Fed implied they are done raising rates, however they are not ready to start cutting rates at the next meeting. The Fed characterizes economic growth as “solid” and states job gains “remain strong”.
Rates and Market:
Rates and Market:
- Fed Funds Target: 5.25%-5.50%
- Market Reaction: The S&P 500, UST 2s and UST 10s were mostly unchanged. The market is pricing a 45% chance of a 25bp rate cut at the March 2024 FOMC meeting, down from 55% before today's announcement.
The FOMC announced the following actions and analysis:
- Unanimous policy vote.
- The Fed suggested they are not hiking rates by changing from “the extent of any additional policy firming” in Dec’s statement, to “any adjustments” in today’s statement.
- The Fed mentioned they are not ready to start cutting rates until the Fed has “gained greater confidence that inflation is moving sustainably toward 2%”.
- The committee will continue to reduce the balance sheet by $95B each month as previously stated. There was no hint to change the size of the reduction.