After the Apr-26 FOMC meeting, target range for fed funds rate (FFR) remained unchanged at 3.50-3.75%, in line with our and market expectations, balancing between providing continued support to the economy and addressing persistent inflationary pressures.
The FOMC maintained that US economic activity continued to expand at a “solid” pace. Growth remains supported by resilient consumer spending, with job market having softened but remained stable in recent months.
Fed Funds Rate
According to the FOMC, inflation in the US is elevated, an upgrade from “somewhat elevated” in previous meetings, partly reflecting higher energy prices amid ongoing tensions in the Middle East.
“We expect the fed funds rate to remain on hold as the Fed balances persistent inflation risks against a cooling but stable labour market.
With job growth subdued, the Fed is unlikely to tighten aggressively, while continued resilience in consumer spending and business activity reduces the urgency to ease further.
Additional rate cuts could risk fuelling inflation, especially amid ongoing geopolitical tensions in the Middle East,” says MBSB.
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