WASHINGTON (Reuters) – The US Federal Reserve (Fed) on Wednesday, as expected, maintained its target for fed funds rates at 5.25%-5.50% for the fourth time in a row, while indicating that it needed more certainty about a decline in inflation to proceed with a rate cut.
This decision was taken unanimously, the American central bank said in a press release published at the end of its two-day monetary policy meeting.
“The risks to our objectives are now more symmetrical,” Fed Chairman Jerome Powell said during a press conference.
Growth is strong, and its slowdown is no longer considered necessary for inflation to return to its 2% target.
Economic activity “has grown at a sustained pace,” the Fed said in its press release. Job creation “is strong and the unemployment rate has remained low”.
Still, the Fed said more data was needed to ensure price momentum was slowing.
“We are confident in the slowdown in inflation but are waiting for more data to ensure that what we see is the right signal,” insisted Jerome Powell. “We are not declaring victory.”
“Based on our meeting today, I don’t think we will have enough certainty about inflation to cut rates in March,” added the Fed chairman.
Jerome Powell, however, stressed that central bank rates were probably at their peak.
Money markets, whose expectations are volatile, lowered the probability of a rate cut in March to around 36% after the governor’s remarks.
The quantitative tightening “is going very well” and “we are reaching the point where questions are starting to be asked” about the end of the process, Jerome Powell also declared.
Members of the Fed’s Board of Governors began discussing the issue during the meeting and will talk more about it in March, he said.
(Reporting Howard Schneider; French version Corentin Chappron, edited by Jean Terzian)
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