Federal funds steady at 4.5%

The story starts with a correction. The federal funds rate is not sitting at 4.5% anymore. On April 29, 2026, the Federal Open Market Committee kept its latest stance in place — a target range of 3.5% to 3.75% after earlier cuts — and said it would keep watching incoming data before making the next move. (federalreserve.gov) That matters because a lot of market commentary still talks as if we are in the old higher-rate regime. (bls.gov) We are not, at least not at the policy-rate level. But the catch is that inflation has not cooperated enough to make this a clean “all clear” moment. April CPI came in hot, up 0.6% on the month and 3.8% from a year earlier. (pitchbook.com) ### So what actually changed at the Fed? The Fed’s latest official move was to maintain a 3.5% to 3.75% target range, not 4.25% to 4.5% or anything “near 4.5%.” The committee’s language was cautious rather than celebratory — basically, rates are lower than before, but policymakers still want more evidence on where inflation and growth are heading. (federalreserve.gov) ### Why does that matter for markets? The fed funds target is the anchor for short-term borrowing costs. When that anchor moves down, financing conditions usually ease across credit markets, even if the pass-through is uneven. That can support refinancing, M&A, and sponsor-backed deals that looked too expensive when cash rates were higher. (bls.gov) ### But isn’t inflation supposed to be easing? Not cleanly. April’s CPI report showed broad price pressure still hanging around, with energy accounting for more than 40% of the monthly increase and shelter also moving higher. So the macro picture is mixed — easier policy on one side, stubborn price pressure on the other. (federalreserve.gov) ### Where does enterprise tech spending fit in? The exact “enterprise IT spending up roughly 12% year over year” claim is hard to pin to a clean public source. What is public points to strong pockets instead — Gartner has AI spending rising 44% in 2026 and security spending rising 12.5%, while IDC keeps describing tech budgets as resilient rather than collapsing. So the better read is selective strength, not a single confirmed 12% enterprise-wide number. (federalreserve.gov) ### Does that help private credit? Mostly, yes — but not automatically. Lower base rates can revive deal flow, and PitchBook’s 2026 outlook leans toward more buyouts and steadier activity as cuts work through the system. (bls.gov) But sticky inflation can keep spreads from tightening too much, because lenders still need compensation for uncertainty and default risk. ### Why are investors still obsessed with efficiency? Because this is not a cheap-money boom. Even with lower policy rates, capital is still more selective than it was in the zero-rate era. Big private-markets firms keep framing 2026 as a market for value creation, underwriting discipline, and margin preservation — not financial engineering for its own sake. (gartner.com) ### So what’s the real takeaway? The clean version is this: policy rates are lower, inflation is still annoying, and capital is available but choosy. That combination helps explain why yield strategies still matter, why leverage is not coming back indiscriminately, and why managers are talking so much about operating improvement instead of easy multiple expansion. (pitchbook.com) ### Bottom line? This is a “rates down, caution intact” market. If you start from the wrong premise — that fed funds is still around 4.5% — the whole investing story comes out distorted. (federalreserve.gov) (mckinsey.com)