Asia-Pacific markets trade mixed as investors digest Fed’s smaller quarter-point hike

The Federal Reserve raised benchmark overnight lending rates by 25 basis points, or 0.25 percentage point, matching investor expectations. The hike brings the Fed’s target range to 4.5%-4.75%, the highest level since 2007.

In its statement, however, the Fed kept language noting that the FOMC still sees the need for “ongoing increases in the target range.” Market participants had been hoping for some softening of the phrase, but the statement, approved unanimously, kept it intact.

— Jeff Cox

Jerome Powell said he doesn’t expect the Fed to cut rates this year, as some major strategists project.

“Given our outlook, I don’t see us cutting rates this year, if our outlook comes true,” the Fed chair said.

Powell also said he was “not concerned” about the bond market implying one more cut before a pause, because some market participants are expecting inflation to fall faster than the Fed does.

“If we do see inflation coming down much more quickly, that will play into our policy setting, of course,” Powell said.

— Jesse Pound

Powell acknowledged that there have been positive signs in recent employment reports even while labor data has remained strong but said it was too early to celebrate.

“It is a good thing that the disinflation that we have seen so far has not come at the expense of the labor market,” Powell said, but added that the economy was still in an “early stage” of easing inflation.

He said that a decline in goods prices and data showing recent softening of the rental housing market is a “good story.”

However, he said that the Fed doesn’t “see disinflation yet” in the core services part of inflation, excluding housing.

—Jesse Pound

Gold hit a session high not seen since April.

The metal traded as high as $1,956.60 during Wednesday trading. That’s the highest it has traded since April 22, 2022, when gold reached $1,957.80.

— Alex Harring, Gina Francolla