The Fed leaves interest rates unchanged. The cost of money remains between 5.25% and 5.50%. The Fed also decided to slow the speed of reducing its balance sheet, in a move that will ease pressure on the Treasury Department and on Treasury issuance. From June the Fed will impose a ceiling of 25 billion dollars a month on Treasuries, from the current 60, keeping that of mortgage-backed securities at 35 billion.
“Recent indicators suggest that economic activity has continued to expand. The labor market remains strong, and the unemployment rate low. Inflation has slowed over the past year but remains high. In recent months there has been a lack of progress towards the 2% objective”, states the Fed in the statement released at the end of the two-day meeting. “We do not expect it will be appropriate to reduce rates until we have greater confidence in the trajectory of inflation towards the 2% target,” the Fed highlights.
Dollar drops after Fed decisions
The dollar fell after the Federal Reserve signaled it was still leaning towards an eventual reduction in borrowing costs, but noted recent disappointing inflation data and hinted at a possible stall. The American currency fell 0.23% to 106.08, while the euro gained 0.24% to $1.0691. Against the Japanese yen, the dollar weakened by 0.22% to $157.44.