On Tuesday and Wednesday, the US Federal Reserve held its March Federal Open Market Committee (FOMC) meeting. Below are some key takeaways from the remarks delivered by Fed Chairman Jerome Powell.
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Policy interest rate unchanged
The FOMC has decided to keep the policy interest rate unchanged, within the 5.25%-5.5% range.
Powell stated, "We believe that our policy rate is likely at its peak for this tightening cycle."
He further elaborated, "Reducing policy restraint too soon or too much could reverse the progress we've seen on inflation, potentially requiring even tighter policy to bring inflation back to 2%. Conversely, reducing policy restraint too late or too little could unduly weaken economic activity and employment."
GDP growth expected to slow
Committee participants expect GDP growth to slow from 2023's pace, with a median projection of 2.1% in 2024 and 2% in 2025 and 2026.
Inflation continues toward 2% target
Powell notes that inflation has "eased notably," while affirming the Fed's commitment to bringing inflation down to 2%, ensuring price stability.
Despite January and February CPI and PCE numbers being higher than expected, Powell stated that he believes this has not "really changed the overall story, which is that of inflation moving down gradually on a sometimes bumpy road toward 2%."