'We are significantly closer to neutral', Fed's Powell says
By Alexander Bueso
Date: Wednesday 18 Dec 2024
(Sharecast News) - The US central bank cut rates as expected but policymakers indicated that they were now anticipating fewer reductions in 2025.
Furthermore, macroeconomic projections from the Federal Reserve's board members and regional presidents showed that they were also anticipating slightly higher inflation during the following year.
"We are significantly closer to neutral. We still think where we are is meaningfully restrictive," Fed president Jerome Powell would go on to say during his post-meeting press conference.
"And I think from this point forward, it's appropriate to move cautiously and look for progress on inflation. We've done a lot to support economic activity by cutting a hundred basis points."
Fed funds futures had already discounted such a shift in the run-up to the meeting.
Yet the market reaction was still negative, albeit after a big move higher since the presidential elections in November.
As of 2126 BST, the Dow Jones Industrials was falling by 1.39% at 42,844.05, alongside a 1.84% drop for the S&P 500 to 5,940.48 and a 2.47% decline on the Nasdaq Composite to 19,622.42.
In parallel, cable was off by 1.05% to 1.2576 and the yield on the benchmark 10-ýear Treasury yield was climbing nine basis points to 4.499%.
-- More to follow --
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