The Dow Jones closed up over 300 points while gold and the 10-year Treasury advanced, as Fed Chair Powell appeared to brush off more recent inflationary data.
The benchmark rate was unchanged at 5.25-5.50%, in line with expectations, in a unanimous decision. The policy statement, however, signaled more economic strength, noting that job gains have remained strong, which was stronger language versus January's "job gains have moderated since early last year." There were also no new mentions of the balance sheet in the policy statement. In the new Summary of Economic Projections, the median dot plot again showed three cuts in 2024, with one Fed official moving the forecast to one dot, which puts the Fed one hawkish revision away from tipping the median to two cuts from three. Core PCE estimates were raised to 2.6% from 2.4% previously.
Despite clear indications of incremental inflationary pressures from Fed economists, Fed Chair Powell’s neutral response signaled to markets he was not knocked off course as the Fed looks to begin easing later in the year.
