The Fed kept rates interest rates steady and stuck to the patient script. The Fed reiterated that they will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes. The Fed did not give any queues to any policy moves or reactions to the recent run of low inflation.
A technical adjustment was delivered with the Fed lowering the IOER rate 5 basis points to 2.35%, a tool used to control the benchmark rate. The IOER should not be interpreted as a dovish signal.
The dollar extended its declines while Treasuries extended gains on the day following the uneventful FOMC decision.
The US economy is at full employment and growth still looks fine, so rate cut bets at this late stage in the cycle might start seeming unusual. But that is where we are. Fed fund futures are still pricing in a 50/50 chance they will cut at the September meeting.
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