The focus is now on Fed Chair Jerome Powell’s upcoming press conference for any more commentary on the U.S.-Israel attack on Iran and the inflationary effect of surging oil prices due to the war, News.az reports, citing Xinhua.
***
The latest Fed rate decision comes at a time when inflation in the U.S. has continued to remain well above the central bank’s target and the labor market has shown mixed signals. The Iran war has only exacerbated matters for monetary policymakers, with Brent – the global oil benchmark – rocketing nearly 50% since the fighting began at the end of February. Prices at U.S. gasoline pumps have hit their highest levels since October 2023.
As anticipated, the Federal Open Market Committee (FOMC) left the federal funds rate unchanged at 3.50%-3.75% for a second consecutive meeting, after having cut the key policy rate by a total of 75 basis points towards the end of last year.
“Available indicators suggest that economic activity has been expanding at a solid pace. Job gains have remained low, and the unemployment rate has been little changed in recent months. Inflation remains somewhat elevated,” the FOMC said in a statement.
“The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook remains elevated. The implications of developments in the Middle East for the U.S. economy are uncertain. The Committee is attentive to the risks to both sides of its dual mandate,” the FOMC added.
The FOMC separately published an updated Summary of Economic Projections (SEP), or dot plot, which continued to show expectations for at least one rate cut this year, and one in 2027. Policymakers also see higher real GDP growth in 2026, 2027, and 2028. Core PCE inflation – the Fed’s preferred gauge to monitor prices – is expected to be higher this year and next year than the Fed’s previous forecast in December.
