FOMC Update
May 1, 2024
As anticipated, the FOMC did not change its benchmark rate range from 5.25%-5.50% for the sixth consecutive meeting. The Fed stated “there has been a lack of further progress toward the Committee’s 2% inflation objective”, implying they will remain on hold until economic data confirms inflation is decreasing. The Fed also announced it will slow its pace of quantitative tightening beginning June 1, lowering the cap on the amount of Treasury securities rolling off the balance sheet to $25 billion each month from $60 billion.Rates and Market:
- Fed Funds Target: 5.25%-5.50%
- Market Reaction: The S&P 500 was mostly unchanged, UST 10-year ticked 5bp lower. The market is still pricing a 43% chance of a 25bp rate cut at the November FOMC meeting.
The FOMC announced the following actions and analysis:
- Unanimous policy vote.
- The Fed reaffirms it does not plan to cut rates “until it has gained greater confidence that inflation is moving sustainably toward 2%".
- The Fed noted economic growth is expanding at a "solid pace" with "strong job gains" and "low" unemployment.
- Officials maintain the pace of runoff for mortgage-backed securities at a maximum of $35B per month.