Fed Keeps Markets on Edge: Will Interest Rates be Lowered?

Fed Keeps Markets on Edge The Federal Reserve has concluded its meeting, announcing its decision regarding interest rates. In the central bank of the USA, the rates will remain at their current levels. It is too early for the first cuts. Fed Decision - The Most Important Event of the Week Wednesday's Fed decision was anticipated by financial market experts as the most important economic event of the week. Predictions suggested no surprises - most economists expected that the Federal Open Market Committee (FOMC), the Fed body responsible for monetary policy in the USA, would keep the cost of money at the current level of 5.25-5.50 percent. And that's what happened. This is the fifth such decision in a row: the last time there was an upward move was in July. In the tightening cycle of monetary policy started in March 2022, the Fed has raised rates by a total of 5.25 percentage points, and the current level is the highest since 2001. Start of Rate Cuts - The Most Anticipated Event The start of rate cuts in the USA is one of the most awaited and crucial economic-financial events worldwide. This will affect not only the cost of money and the activity of the world's largest economy but also the valuation of many financial instruments, with the dollar and other currencies alongside bonds at the forefront. It should also impact the stock markets. Inflation in the USA Higher than Expected Experts note that in the past two months, inflation in the USA has been higher than expected. This has led the market to lose hope for the beginning of easing monetary policy at the May 1 meeting. Before they begin cuts, FOMC members will want to ensure that price pressure has been contained. While in previous months the American economy surprised with strength and did not even come close to a recession despite high rates, the latest data show signs of weakening.