• The Fed left interest rates unchanged at 5.25%-5.5% as expected.
• The statement acknowledged a stagnation of progress on inflation and the need for more confidence to start cutting.
• The bank seemed to have embraced the idea of less than three cuts in 2024.

The USD/JPY trades at 157.42 holding daily losses on Wednesday after the Federal Reserve (Fed) decision to hold rates at 5.25%-5.5%.

In the statement, the Federal Reserve has acknowledged that there has been no significant progress in the battle against inflation recently, noting a "lack of further progress toward the 2% inflation goal in recent months." This observation formed the core of their hawkish stance, which was anticipated by markets. Despite this, the Fed decided to slow down the pace of Quantitative Tightening, a move that was expected. They now view the risks to inflation as more balanced, leading to a unanimous vote among the members.

As for now, the odds of cuts in June and July remain low, while those probabilities still remain far to be priced in for the September meeting. Markets are starting to place bets on only one cut in 2024, which would come in November. Powell’s presser will be key for markets to get additional guidance