The Fed Meeting In March 2024 took place on Wednesday, and here is a brief on what happened in the meeting.
Fed Meeting in March 2024
In the Fed Meeting in March 2024, Federal Reserve Chair Jerome Powell wanted to focus on the recent low inflation readings and confirmed that the US economy was moving closer to the central bank’s 2% inflation target.
Even though there have been some higher inflation readings recently, Powell is cautious about them because of the low readings reported in the second half of last year.
Powell said that low readings in the second half of last year made calculating the 12-month inflation rate more difficult. He added, however, that the Federal Reserve is still looking for data that will confirm the low readings from last year.
According to Powell, this additional data will give the Federal Reserve more confirmation that inflation is moving sustainably to the 2% target.
In the Fed Meeting March 2024, Federal Reserve Chair Jerome Powell also mentioned that even if there is strong hiring, it would not stop them from lowering interest rates.
He added that the job market’s strength alone will not be a reason to delay rate cuts and that they are not worried about inflation just because the job market is doing well. Powell also noted that an unexpected slowing down in the labor market could also push the Federal Reserve to take a fast policy response.
In the Fed Meeting in March 2024, Powell added that even though inflation data like the consumer price index and personal consumption expenditures rose in January and February, the overall trend is downward.
In the Fed Meeting March 2024, he added that this data will not change the fact that inflation is slowly moving towards the Fed’s target of 2%, even if it’s on an uneven path.
Powell also said that the Federal Reserve will not be overreacting to these two months of data, but they also will not be ignoring them.
Additionally, Federal Reserve Chair Jerome Powell mentioned in the Fed Meeting in March 2024 that the central bank has not decided yet on adjusting the pace of its balance sheet reduction. However, Powell indicated that an adjustment is going to happen in the future.
Responses to Fed Meeting in March 2024
The Fed Meeting in March 2024 has brought mixed responses from investors and analysts.
Seema Shah, chief global strategist at Principal Asset Management, said that Federal Reserve Chair Jerome Powell seems to indicate that he will require more data to avoid cutting rates rather than a reason to do so.
She added that after the Fed Meeting in March 2024, it is clear that the Federal Reserve is aiming for a soft landing scenario with stronger growth, lower unemployment, and higher inflation, without any change to the median dot.
Shah said that cutting the rates before inflation is near the Fed’s 2% target, and while GDP growth is above average, it could be seen as a risky move.
David Russell, global head of market strategy at TradeStation, said that Federal Reserve Chair Jerome Powell and the central bank are holding steady despite there being clear signs of inflation in the US economy.
He added that investors are reassured that the expectation for three rate cuts is still in the dot plot, which supports market confidence and risk appetite.
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