US Fed keeps rates steady for fourth straight time

• The US Federal Reserve keeps the key rate unchanged at 5.5%
• The Fed continues to maintain the status quo amid easing inflation.
• The US retail inflation rate stood at 3.4% in December 2023 – significantly lower than 9.1% in mid-2022.
• The Fed decision is in line with the street expectations.
• Meanwhile, major US indices are trading lower, following disappointing results of tech giants like Alphabet and Microsoft.

The S&P 500 index is down 0.49%, while Dow Jones (+0.07%) is trading flat. Tech-heavy Nasdaq index is in red, declining 1.03%.

Experts estimate the Federal Open Market Committee (FOMC) won’t cut rates till June 2024. Amid robust household spending and uncertain macro outlook, the Fed policymakers have indicated that rate cuts won’t happen in the first meeting of the year.

The core personal consumption expenditure index, which is considered as the Fed’s favourite gauge, increased 2.9% in December 2023.

This was lower than the 3.2% rise in November 2023.

Gold prices on Wednesday were headed for their first monthly dip in four as investors tempered their bets of swift and deep rate cuts in the U.S. in the light of a resilient economy, and also awaited remarks from the Federal Reserve due later in the day.

Spot gold edged 0.1% lower to $2,033.88 per ounce, after touching a two-week high of $2048.12 in the previous session. Prices have dropped 1.4% so far this month.

(Inputs from Reuters)

The retail inflation rate in the US stood at 3.4% in December 2023 compared to 3.1% in November 2023. While it is significantly lower than 9.1% in mid-2022, inflation continues to remain above the target of 2%.

The US Federal Reserve is expected to keep the key rate unchanged at 5.5%. The street estimates that the US central bank will continue to maintain the status quo amid easing inflation.