NEW YORK- US Treasury yields fell after Federal Reserve policymakers indicated on Wednesday they still anticipate reducing borrowing costs by half a percentage point by the end of this year, scuttling some expectations that this projection could be reduced to only one 25-basis-point cut.
Some traders had speculated that higher inflation risks posed by new tariffs could lead policymakers to adopt a less dovish outlook on rates. While the median interest rate expectation was unchanged, more policymakers did shift their projections towards fewer rate cuts.
The Fed kept interest rates unchanged, as expected, and Fed officials marked up their outlook for inflation this year. But they also marked down the outlook for economic growth, with slightly higher unemployment by the end of this year.
The Fed struck “a slightly less hawkish tone than many on Wall Street anticipated,” Dan Siluk, head of global short duration & liquidity and portfolio manager at Janus Henderson said in an emailed statement.
