The Federal Reserve held its first meeting of the year on Wednesday and decided to hold rates at 5.25% - 5.50%. Jerome Powell, chairman of the Fed, said that members of the Federal Open Market Committee want to feel more confident that inflation is on a sustainable path toward their 2% target before cutting interest rates. Which is why he virtually ruled out a cut as soon as March, leading the market to adjust expectations for a first reduction only in May. The Fed Chairman said he sees a greater risk of inflation stabilizing significantly above the Fed's 2% target than a further increase in inflation. Finally, Powell announced that the Fed will discuss reducing its balance sheet at its March meeting.
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