Fed keeps rates steady as cautious approach to policy continues
By Yasin Ebrahim
Investing.com — The Federal Reserve kept rates steady on Wednesday as the central bank continued its cautious monetary policy approach, though stopped short of ruling out further rate hikes.
The Federal Open Market Committee, the FOMC, kept its benchmark rate in a range of 5.25% to 5.5%.
This was the second-straight FOMC that the committee decided to keep rates on hold, raising hopes that the Fed isn't like to resume rate hikes. But Fed Chairman Jerome Powell was unwilling to rule out further rate hikes.
«We're not confident at this time that we've reached such a stance,» Fed Chairman Jerome Powell said, responding to a question on whether financial conditions are sufficiently restrictive yet.
The Fed’s decision to hold rates steady comes in the wake of a surge in Treasury yields to multi-year highs that have tightened financial conditions, prompting several Fed members including Powell to suggest that higher Treasury yields could help rein in elevated inflation.
«These higher treasury yields are showing through to higher borrowing costs for households and businesses,» Powell said. «Those higher costs are going to weigh on economic activity,» he added.
In his press conference, Powell said the extent to which tightening in financial conditions, brought on by higher yields on long-term Treasuries, would shape future rate decisions would depend on two conditions.
«The first is that the tighter conditions would need to be persistent, and that is something that remains to be seen,» Powell said. «The second thing is that the longer term rates that have moved up, they can't simply be a reflection of expected policy moves from us.»
Some have suggested that the recent surge in yields on long-term
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