Slow Inflation Progress Leaves the Federal Reserve with Little Room for Interest Rate Cuts, but Yen Rebounds Suggest Central Bank Intervention”.

The Federal Reserve has announced that progress has been slow in bringing inflation down to its 2% target. This suggests that any interest rate cuts will likely not happen until later this year at the earliest. Previously, investors had expected around six quarter-of-a-percentage-point cuts in 2024, but have since reduced their expectations.

In response to the announcement, the yen saw a significant rebound, leading to speculation that authorities may have intervened to support the currency for the first time since 2022. The yen had dropped to a 34-year low of 160 to the dollar following the Bank of Japan’s decision to keep its benchmark interest rate unchanged between zero and 0.1%. The central bank had raised the rate from minus 0.1% in March, but did not provide any clear indication of when it might raise rates again. Additionally, there was no plan presented to significantly reduce its bond-buying activities.