Powell explains decision to hold interest rate steady, speaks on outlook

Fed Chair Jerome Powell explains the decision to leave the policy rate, federal funds rate, unchanged at the range of 5.25-5.5% and responds to questions in the post-meeting press conference. Investors, meanwhile have found clues that monetary policy tightening is over. On the daily chart, after FOMC decision, the US Dollar Index edged higher toward 103.050 and erased some of its daily losses with the immediate reaction. At the time of writing, the index stands around the 103.08 mark.

The US Federal Reserve (Fed) announced on Wednesday that it left the policy rate, federal funds rate, unchanged at the range of 5.25%-5.5% following the January policy meeting. This decision came in line with the market expectation.

In its policy statement, the Fed said that it does not expect it will be appropriate to reduce rates until there is greater confidence inflation is moving sustainably toward 2%.

Fed policy statement key takeaways

“Risks to achieving employment and inflation goals are moving into better balance.”

“Economic outlook is uncertain, Committee remains highly attentive to inflation risk.”

“Recent data suggest economic activity has been expanding at solid pace.”

“Jobs gains have moderated but remain strong, unemployment remains low, inflation has eased but remains elevated.”

“Bond holding reductions will continue as described previously.”

“Vote in favor of policy was unanimous.”