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Fed Stays Put, Pulls the Plug on March Rate Cut Speculation

The Federal Open Market Committee unanimously decided to keep the benchmark interest rate at its highest level since 2001, ranging between 5.25% and 5.5%, for the fourth meeting in a row.

In their statement following the meeting, the officials removed a reference to potential further policy tightening. They emphasized that rate reductions would not be considered appropriate until there is more confidence that inflation is consistently moving towards the 2% target. Echoing this stance, Powell addressed the market's expectation of five or six rate cuts this year, stating, “We are prepared to maintain the current federal funds rate range for an extended period if necessary.”

Our Take: Powell's resistance to the idea of a March rate cut is not surprising, given the current economic data, which is too strong to suggest any significant downturn before inflation falls below the target. Unless there's a credit or market event, the likelihood of a rate cut in March is extremely low, almost negligible.


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