DATA & FIGURES
The Fed's statement and projections revealed several key figures, including the expectation that 9 officials anticipate a hike in rates by the end of 2026, with the policy interest rate expected to rise by a quarter of a percentage point by the end of this year, from its current range of 3.50% to 3.75%. The outlook for inflation for the end of 2026 was marked up to 3.6% from 2.7%, before it is seen falling to 2.3% next year.
THE SCENARIO
The US Federal Reserve's decision to hold interest rates steady comes amid a complex geopolitical and economic landscape. US President Donald Trump has been demanding rate cuts, while inflation has been rising, reaching 40-year highs during the Covid-19 pandemic.
DIRECT QUOTE
"I can't give you any forward guidance about what we're going to do next. The good news is we'll be meeting in six weeks." — Kevin Warsh, Chairman, US Federal Reserve
BBN INSIGHT
The US Federal Reserve's decision to hold interest rates steady, with a potential hike later this year, reflects the central bank's efforts to balance its dual mandate of maximum employment and price stability.
MARKET REACTION
The market reaction to the Fed's decision was mixed, with Treasury yields rising and US stocks falling modestly. The dollar also gained ground against a basket of currencies, while short-term interest-rate futures are now pricing a bigger chance of a rate hike by September than a hold.