Policy Steady; Statement Indicates Stalled Inflation Progress
As expected, the Fed opted to keep rates steady in a range of 4.25-4.50% after lowering rates 100bps in a matter of four months.
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In the statement, the Fed maintained the language of a “solid” economy, while noting the low level of unemployment has seemingly “stabilized,” suggesting the Committee has adjusted its assessment of labor market conditions; moving from concerns of emerging weakness, policy makers appear to be conceding to ongoing solid conditions.?
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On the inflation front, the Committee continues to acknowledge the sticky nature of inflation. While not necessarily accelerating, policy makers noted the?still elevated level, removing recent wording of further “progress” towards the Committee’s goal.
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The vote to keep rates steady was unanimous.
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Bottom Line: While a policy pivot, the decision to hold rates study at the start of the year appears to be a non-event, given the move was widely anticipated and had been fully priced into the market for?some time. Meanwhile, the?upwards assessment of the labor market and downward assessment of inflation improvement in the statement?suggests the Fed is increasingly willing to take a prolonged position on the sideline if warranted by the data, as the Committee continues to assess the evolution of conditions and the impact of fiscal policy.
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The press conference is underway.?
Link to January 29 FOMC Statement:
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-Lindsey Piegza, Ph.D., Chief Economist
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