BlackRock: Fed in no hurry to adjust policy, seems to rule out March rate cut

BlackRock: Fed in no hurry to adjust policy, seems to rule out March rate cut

30 januari 2025

Fed
Federal Reserve Washington.png

By Jean Boivin, Head of the BlackRock Investment Institute

The Federal Reserve kept rates on yesterday and Fed Chair Powell repeated several times that the central bank was “in no hurry” to adjust its policy stance, seemingly also ruling out a cut at its next meeting in March.

The meeting was further confirmation of the big shift in the Fed’s view since its September meeting, when its 50-basis-point cut led markets to price a slew of cuts this year. The Fed now considers the risks to inflation to be balanced. We’ve long said persistent inflation pressures would prevent the Fed from cutting far or fast – and that this would not be a typical rate cut cycle, but a finetuning of the policy stance. That is what is now materializing.

Markets have been adjusting to high-for-longer in recent months and are now pricing just two Fed rate cuts this year, with the next one not until June. An initial drop in the S&P 500 was largely reversed after Chair Powell clarified that the removal from the Fed policy statement of a line about inflation making progress toward its 2% target was not intended to send a signal.

Notably, Chair Powell did not explicitly mention which risks the Fed believes could push inflation higher – even though that has driven its shift in policy stance. We think the Fed is trying to avoid making any forward-looking statements given the political changes in Washington. That left yesterday's revised statement and press conference largely uninformative about how the most important developments to come will shape its decisions.

Gerelateerde berichten