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Below on US Feds keeping Interest rates unchanged By Mr. Mohit Ralhan - CEO, TIW Capital

While the Fed decided to keep rates on hold, it did little to push back on the aggressive rate cut pricing by the market participants. Median dot plot for 2024 end showed Fed Funds rate at 4.6%, which was 50 bps lower compared to September projections. The Fed Chair even alluded to the members’ having a discussion on rate cuts.

The Fed has achieved considerable progress in bringing down inflation without causing serious economic damage. However, there is still room for improvement as core inflation is running above 3%, much above the central bank’s target. Wage growth is also higher than what is consistent with the inflation target. This means that possibility of further tightening is still not completely off the table, but the chances are low. Given the lags with which monetary policy transmission takes place, the FOMC wants to be ahead of the curve by taking into account the risks to growth from higher rates. As inflation heads lower, real rates could become too restrictive if the Fed does not calibrate policy.
Meeting outcome suggests that FOMC members will keenly monitor any deterioration in economic data or sentiment indicators besides inflation trajectory."

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