Federal Reserve officials left interest rates unchanged at a more than two-decade high at their first meeting of 2024 and hinted that their next move will be to lower interest rates. But officials also made it clear that they need to see more progress on inflation before reducing borrowing costs.

“In considering any adjustments to the target range for the federal funds rate, the committee will carefully assess incoming data, the evolving outlook and the balance of risks,” the Fed said in its post-meeting statement on Wednesday, dropping previous language suggesting that officials saw “additional policy firming” as potentially appropriate.

But even as they dropped that bias toward rate increases, the Fed’s policy-setting committee also said that it “does not expect it will be appropriate” to cut rates until officials had “greater confidence that inflation is moving sustainably toward 2 percent.”

Jerome H. Powell, the Fed chair, is scheduled to deliver a news conference and will be able to provide more details on how policymakers are thinking about the path ahead.

Sensex up

Notwithstanding muted expectations from the interim budget, benchmark indices advanced nearly 1 per cent on Wednesday amid buying in banking and technology stocks.

The rally came as investors eyed commentary by the US Fed on the interest rate trajectory even as US treasury yields fell below 4 per cent.

After opening weak at 71073.04, the Sensex regained its composure and zoomed 711.49 points or 1 per cent to touch a day’s high of 71851.39. It subsequently ended at 71752.11, marking a gain of 612.21 points or 0.86 per cent. On the NSE, the Nifty was up 203.60 points or 0.95 per cent to settle at 21725.70.

Market circles said while finance minister Nirmala Sitharaman is unlikely to make any material announcements that could move equities on Thursday, the interim Budget could give a glimpse of the vision of the NDA government should it return to power after the general elections.

Yet investors will be focussing on whether there will be any changes to the long-term capital gains tax or the securities transaction tax (STT).