As widely expected by the market, the Federal Reserve (Fed) decided to increase interest rates by 25 basis points to 4.75% at the February 2023 policy meeting.
A follow-up statement from Fed Chairman Jerome Powell was also dovish in tone, where the central bank saw that inflation had started to decline (disinflation).
Here are the key takeaways from the meeting:
Inflation data over the past 3 months show an expected decline, but the Fed still needs more evidence that it is on a sustained downward path.
Powell admitted that the process of disinflation had begun.
The central bank does not want excessive policy tightening.
Still, it's too early to think the Fed has won the inflation battle.
Policymakers see slow rate hikes as necessary to continue.
It is not ideal for the Fed to cut rates this year according to the current view, but it is not impossible to do so if inflation falls faster.
Powell assessed that positive growth will continue but at a slower pace with the job market remaining strong.
A series of results and statements, it is evident that the stance of the central bank of the United States has shifted towards dovish.
Even so, the central bank is still firming its stance on efforts to fight inflation indicating that rate increases will continue depending on incoming economic data.
