Kapstream provides a brief comment on the overnight FED statement
Kapstream provides a brief comment on the overnight FED statement
“The US Federal Reserve left rates on hold for a second consecutive meeting overnight, at 5.25-5.50%. Chairman Powell reiterated that the priority for the FOMC remains assessing if further rate hikes are required to get inflation down to their 2% target. The lagged impact of the significant amount of tightening to date, combined with a tightening in financial conditions (due to higher longer end bond yields) were the key reasons the FOMC elected not to hike at this meeting.
Whilst we may have seen the end of the tightening cycle in the US, rate cuts from the Federal Reserve were not discussed and in our view remain some time away. Increased confidence that inflation is heading towards target, plus an easing in labour market pressures would be required for rate cuts to occur, something we don’t expect until later in 2024. Consequently, Kapstream believes that patience in extending portfolio duration exposure will be rewarded.”
Kris Bernie, Portfolio Manager, Kapstream
Please access the full Federal Reserve FOMC statement here