Rate engine nears a pause signal

The rate hike was a unanimous decision of the Fed’s committee members and largely in line with market expectations. The next Fed meeting is on 13-14 June.

- Rupali Sarkar

The US Federal Reserve (Fed) has delivered a 25 basis points (bps) policy rate hike, taking the federal funds rate to 5-5.25%. This is the Fed’s tenth consecutive rate hike since March last year. The battle against inflation has led to a whopping 500bps monetary policy tightening in the said span.

The rate hike was a unanimous decision of the Fed’s committee members and largely in line with market expectations. However, a dove—signalling an upcoming pause—is hovering. The next Fed meeting is on 13-14 June.

The noteworthy shift in Fed’s tone is comforting. For instance, the Fed has said, “Looking ahead, we will take a data-dependent approach in determining the extent to which additional policy firming may be appropriate." In comparison, in the March meeting, the Fed had noted, “The committee anticipates that some additional policy firming may be appropriate."