Today saw the Federal Reserve maintain interest rates at the current 22-year high of 5.25%-5.5%. This establishes the growing (if not grown) concensus that interest rates for the US have now hit their teminal level. This comes after the CPI release yesterday which saw headline YoY inflation fall 0.1% to 3.1% and YoY Core inflation stay constant at 4%.
FED Chair Jerome Powell alluded to the CPI report, reiterating that healthcare and housing rates continue to see high inflation rates and therefore should be closely montiored (rather ironic considering high housing costs is parly because of high interest rates but nevertheless...). However, Powell stated that inflation concering goods, housing and services are showing signs of easing - this demonstrates a lagging effect between housing prices and rental prices/ housing costs.
One of the more surprisng revolutions of the interest rate decision was the infamous dot plot chart, which saw policy makers expecting 75bps of cuts next year - something the markets particuarly enjoyed. However, Powell gave his typical precaustion saying that rates may increase if necessary though realistically, i do not see this happening given the economic consequences of such an action and the likely stockmarket sell-off which would ensue.
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