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Updated February 12th, 2024 at 15:23 IST

Fed unlikely to cut rates in March amid inflation caution

The Fed funds rate was kept unchanged at a 23-year high of 5.25 per cent-5.5 per cent for a fourth consecutive meeting last month. 

Business Desk
The Federal Reserve
The Federal Reserve | Image:Reuters Photo
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Fed rates outlook: The Federal Reserve is unlikely to cut interest rates in March. At the beginning of the month, Federal Reserve chair Jerome Powell pushed back strongly on the idea that the central bank could cut rates in the spring, as many market participants have been expecting.

The Fed funds rate was kept unchanged at a 23-year high of 5.25 per cent-5.5 per cent for a fourth consecutive meeting last month.  

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The decision aligned with market expectations as policymakers underscored the need for greater confidence in inflation's trajectory toward the targeted 2 per cent before considering any rate cuts. Powell stressed upon a cautious approach, stating that while a reduction in rates may be warranted at some point this year, a move in March seems improbable. 

"I don’t think it’s likely the committee will reach a level of confidence by the time of the March meeting” to lower rates, “but that’s to be seen," Powell said, adding that a March cut is not the base case for policy makers.

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Notably, the Fed omitted references to potential rate hikes, citing a more balanced outlook for achieving employment and inflation objectives. 

Despite acknowledging a slight moderation in inflation, the central bank remains vigilant, prepared to adjust monetary policy as needed to safeguard its goals.

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The United States is also expected to report January consumer inflation expectations later today. 

The country will also release its inflation (CPI) and core inflation data on Tuesday, February 13.

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Published February 12th, 2024 at 15:23 IST

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