The Federal Reserve held interest rates steady for the fourth straight meeting and signalled its openness to cutting them, though not necessarily right away.
In a statement issued after their two-day meeting, Fed officials dropped their previous assertion that a rate hike was possible and instead adopted a more even-handed assessment of the future policy path.
“The committee judges that the risks to achieving its employment and inflation goals are moving into better balance,” the central bank’s policymaking Federal Open Market Committee said on Wednesday.
“In considering any adjustments to the target range for the federal funds rate, the committee will carefully assess incoming data, the evolving outlook, and the balance of risks.”
But in a sign that officials are not in a rush to reduce rates, the FOMC also said it “does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 per cent.”
The decision to leave the target range for the benchmark federal funds rate unchanged at a 22-year-high of 5.25 per cent to 5.5 per cent was unanimous.
The central bank also reiterated its intention to continue reducing its balance sheet by as much as $95 billion per month.
In their post-meeting statement, policymakers tweaked their description of economic activity. Following stronger-than-expected economic growth in the fourth quarter, the committee described activity as “expanding at a solid pace.” Among other changes to the statement, the committee omitted language that had been included in some form since last March, calling the banking system “sound and resilient” and warning that tighter credit conditions were likely to weigh on the economy. – Bloomberg
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