Fed Leaves Rate Unchanged, Will Slow The Pace Of Asset Sales

On May 1, 2024, Fed released FOMC Statement. The central bank decided to maintain the target range for the federal funds rate at 5.25 – 5.5%, in line with analyst consensus.

In the statement, Fed noted that there has been a lack of a further progress towards the 2% inflation objective.

Nevertheless, Fed will slow the pace of asset sales starting in June. The monthly redemption cap on Treasury securities will decline from $60 billion to $25 billion.

The monthly redemption cap on agency debt and agency mortgage-backed securities will be maintained at $35 billion.

Treasury yields have started to move lower as Fed will reduce the selling pressure on the market.

U.S. Dollar Index pulled back towards 106.10 as traders reacted to the upcoming reduction of asset sales.

Gold remained stuck near the $2305 level as traders focused on U.S. dollar’s pullback.

SP500 made an attempt to settle above 5035 as traders hoped that Powell could be less hawkish than previously expected.

Traders should note that Fed Chair Powell’s press conference starts soon. Powell’s words will likely have a significant impact on market dynamics.

For a look at all of today’s economic events, check out our economic calendar.