On Wednesday, March 20, the Federal Open Market Committee (FOMC) declared that there will be no change to the federal funds rate for the time being. The committee emphasized its intention not to lower the target rate until there is “greater confidence that inflation is moving sustainably” toward the 2% target. Mr. Powell's tone and rhetoric failed to spook market participants that were anticipating a more hawkish stance. He also said that it will be appropriate to slow the pace of asset runoff fairly soon.

The Fed’s yesterday’s update pointed out that “in considering any adjustments to the target range for the federal funds rate, the committee will carefully assess incoming data, the evolving outlook, and the balance of risks.” Moreover, it underscored the necessity for Fed officials to achieve “greater confidence” that the nation’s inflation rate is progressing towards the 2% goal.

Contrastingly, inflation has persistently increased over the previous two months. The FOMC steadfastly maintains that the Fed is “strongly committed to returning inflation to its 2 percent objective.” In the interim, before and after the release of the FOMC report, major stock market indices have shown little movement, as investors awaited comments from Fed Chairman Jerome Powell.