Fed keeps rates on hold, signals further delay to rate cuts as disinflation slows By

By Yasin Ebrahim

-- The Which futures trading platform is the most reliableFederal Reserve kept interest rates steady on Wednesday, and signaled that rates could likely remain higher for longer than previously expected amid a lack of progress in recent months on slowing the pace of inflation.  

The Federal Open Market Committee, the FOMC, kept its in a range of 5.25% to 5.5%.

The Fed has kept rates in the current range for the sixth-straight session as it continues to assess incoming to economic data to gauge whether inflation is slowing enough to begin rate cuts.

Since the turn of the year, however, the inflation data have surprised to the upside, forcing investors to rein in their bets on rate cuts. Investors now only expected one rate cut this year, according to ’s Fed Rate Monitor Tool, well below the six or seven seen at the start of the year.

In recent months, there "has been a lack of further progress toward the Committee's 2 percent inflation objective," the Fed said in a statement. 

Earlier this month, Powell acknowledged that the recent upside surprises in the inflation data have dented the Fed’s confidence to begin rate cuts.

“The recent data have clearly not given us greater confidence, and instead indicate that it’s likely to take longer than expected to achieve that confidence,” Powell said to the Wilson Center’s Washington Forum on the Canadian Economy on Apr. 16. 

The pricing out of rate cuts, however, has led to jump in Treasury yields, and tighter financial conditions, which some believe could help curb price pressures.

“If Jay Powell aims his caution only at the medium term (the next few months) the impact may be muted, though, as the swap market has already absorbed a "hawkish" multi-month delay to rate cuts,” Macquarie said in a note, ahead of Powell’s press conference at 14.30 ET.

The Fed also said it would begin to slow its bond selling, or quantitative tightening program next month, which was launched in 2022 to shrink the assets it holds on its balance sheet, .

Beginning in June, the Fed will allow about $25 billion in Treasury securities to roll off its balance sheet, down from the current pace of $60 billion. 

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