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# Federal Reserve Holds Rate at 5.25–5.50% and Slows Quantitative Tightening in May 2024
- URL: https://www.theglobalbanker.com/federal-reserve-holds-rate-5-25-5-50-slows-quantitative-tightening-may-2024/
- Published: 2024-05-01T16:41:00.000Z
- Updated: 2026-11-03T12:37:46.000Z
- Description: The FOMC kept its policy rate unchanged and cut its monthly Treasury runoff cap from $60bn to $25bn.
- Author: TGB Editorial Team
- Tags: Central Banks, Americas, #archive

The Federal Reserve left its benchmark federal funds rate unchanged at 5.25%–5.50% on Wednesday, with the Federal Open Market Committee voting unanimously to hold as policymakers continued to assess whether inflation was declining durably enough to justify cutting borrowing costs. The decision extended the pause that began when the Fed last raised rates in mid-2023.

Chair Jerome Powell told reporters that while the Committee remained attentive to upside inflation risks, a further rate increase was unlikely at this juncture. He indicated that the Fed required additional data showing a sustained return toward its 2% target before cuts could be considered.

#### TREASURY RUNOFF CAP CUT TO $25 BILLION

Alongside the rate decision, the Fed announced it would reduce the monthly cap on Treasury securities permitted to roll off its balance sheet from $60 billion to $25 billion. The cap on agency mortgage-backed securities was left unchanged. The Fed launched its quantitative tightening programme in mid-2022 to shrink a balance sheet that had grown to nearly $9 trillion during the pandemic era.

Powell said slowing the pace of runoff did not mean the balance sheet would ultimately shrink by less than it otherwise would, but would allow it to approach its ultimate level more gradually. 

#### OUTLOOK

Powell emphasised that the Fed's next move — whether a cut or a prolonged hold — would be determined entirely by incoming data on inflation and the labour market. He acknowledged that progress toward the 2% inflation target had been slower in 2024 than officials had initially anticipated, with price pressures proving more persistent in services sectors tied to wages and shelter costs than in goods, where disinflation has been more pronounced.

The FOMC statement noted that inflation had eased over the past year but remained elevated, and that in recent months there had been a lack of further progress toward the Committee's 2% objective. Members agreed that it would not be appropriate to reduce the target range for the federal funds rate until they had gained greater confidence that inflation was moving sustainably toward 2%.