Joe Biden gets boost from Fed rate decision

The U.S. central bank held rates at their current range for the fourth straight time, signaling that the hiking cycle may be over setting up the stage for possible rate cuts in 2024. The possible reduction of rates, which, at their current two-decade highs, have helped push up borrowing costs across the economy, could be a boost for President Joe Biden as they could reduce the cost of buying a home and business investment.

Beginning in March of 2022, the Federal Reserve raised rates at the most aggressive pace since the 1980s to battle inflation that had soared to 40-year highs. Since then, inflation has slowed while the jobs market has kept hiring even at a slower pace and the economy has continued to grow amid elevated rates.

On Wednesday, Fed policymakers acknowledged that dynamic in their rate decision.

“Recent indicators suggest that economic activity has been expanding at a solid pace. Job gains have moderated since early last year but remain strong, and the unemployment rate has remained low,” they said. “Inflation has eased over the past year but remains elevated.”

But the central bank also alluded to their belief that they are getting closer to meeting their 2 percent inflation as they held rates to their current 5.25 to 5.5 percent range.

“The Committee judges that the risks to achieving its employment and inflation goals are moving into better balance. The economic outlook is uncertain, and the Committee remains highly attentive to inflation risks,” policymakers said.

They added: “In considering any adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks.”

Fed chair Jerome Powell suggested at a later press conference with reporters that the current tightening cycle had reached its peak even as he warned that they are closely watching for risks of elevated inflation.

“If the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year,” Powell said.

Analysts suggested that the Fed’s language in its statement signaled a slashing of rates was coming.

“The statement did indicate some fairly significant changes to its statement regarding the expected direction of future policy, confirming that the next move will likely be a cut,” said Mortgage Bankers Association’s chief economist Mike Fratantoni. “We continue to expect a first cut at the May meeting, with three cuts in total this year.”

This is a developing story and will be updated with new information