US Fed Meeting highlights: FOMC keeps interest rates unchanged for 4th consecutive time, Dow falls 200 points

We will now wrap the blog.

Investors have been anticipating a potential rate cut or the beginning of a rate-cutting cycle at the March meeting, but Chair Powell expressed skepticism about that timing on Wednesday afternoon, CNBC reported.

“Based on the meeting today, I would tell you that I don’t think it’s likely that the committee will reach a level of confidence by the time of the March meeting to identify March is the time to do that,” he said. “But that’s to be seen.”

“The Fed’s probably thinking they’re not really in any rush, there’s no need to really rush into cutting rates,” said Subadra Rajappa, head of US rates strategy at Société Générale, a French bank. “That’s why the markets started to question the March rate cut.”

The S&P 500 fell on Wednesday as Alphabet led a sell-off in technology shares. The market gyrated in afternoon trading as investors evaluated the latest Federal Reserve rate decision.

The S&P 500 was down 0.5% with tech shares like Alphabet and AMD the biggest losers. The Nasdaq Composite lost 0.8%. The Dow Jones Industrial Average added 51 points, or 0.1%, aided by rebound in Boeing share following its results.

The central bank may need more signs that inflation is easing before it begins “dialing back the restrictive level” and cutting rates, said Federal Reserve Chair Jerome Powell, reported CNBC.

“The median participant wrote down three rate cuts this year, but I think to get to that place where we feel comfortable starting the process, we need some confirmation that inflation is in fact coming down sustainably to 2%,” he said.

Fed Chair Jerome Powell acknowledged that inflation has been falling in recent months, though not enough to convince the central bank that it can ease back on rates, reported CNBC.

“The lower inflation readings over the second half of last year are welcome, but we will need to see continuing evidence to build confidence that inflation is moving down sustainably to our goal,” Powell said.

The Federal Reserve’s January statement, released earlier this afternoon, indicates that the Federal Open Market Committee seems to be “reasonably satisfied with financial conditions at the moment,” according to Dennis Lockhart, the former president of the Atlanta Federal Reserve.

“The committee probably doesn’t really believe or have a lot of confidence. They can manipulate market interest rates very much so they just want to set the policy and let the markets react. I think their view is that at the moment, they’re clearly still restrictive, but at a satisfactory level,” he told CNBC’s “Power Lunch” on Wednesday.

Federal Reserve Chair Jerome Powell said the US economy has made some good progress, with inflation easing from its highs without signs of increased unemployment. Still, there is work to be done, he said.

“Inflation is still too high, ongoing progress in bringing it down is not assured and the path forward is uncertain,” Powell said, CNBC reported. “I want to assure the American people we are fully committed to returning inflation to our 2% goal,”

The Federal Reserve has set the table for rate cuts starting in June, according to David Kelly, chief global strategist for JPMorgan Asset Management, reported CNBC.

“It sounds to me like June, September, December is what they are thinking — three rate cuts this year —provided the economy keeps growing,” he said in an interview with CNBC following the release of the Federal Reserve’s statement.

Stocks fell to their session lows Wednesday after the Federal Reserve kept interest rates unchanged but indicated rate cuts may not be on the horizon just yet.

The S&P 500 was down 0.9%, while the Nasdaq Composite lost 1.4%. The Dow Jones Industrial Average dipped 40 points, or 0.1%, reported CNBC.

“In considering any adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks,” the FOMC statement said.

The Committee judges that the risks to achieving its employment and inflation goals are moving into better balance. The economic outlook is uncertain, and the Committee remains highly attentive to inflation risks.”

“The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent,” the statement from FOMC said.

The S&P 500 was down about 0.7%, while the Dow Jones Industrial Average fluctuated near the flatline, up about 17 points. The Nasdaq Composite was the underperformer of the three major averages, down 1.2%.

The 10-year Treasury yield traded at 3.967%, down nine basis points, while the rate on the 2-year note was 4.248%, down 11 basis points

US Federal Reserve leaves rates unchanged, as expected

European stocks closed slightly higher Wednesday as investors digested corporate earnings and awaited the latest monetary policy decision from the U.S. Federal Reserve.

The regional Stoxx 600 provisionally ended up 0.1% for the session, after closing Tuesday at a two-year high. Autos stocks climbed 1.1% while retail stocks fell over 2.1%.