Fed keeps rates steady, says more ‘confidence’ needed before cutting inflation
Washington: The federal Reserve Left Rate of interest Unchanged on Wednesday but took a big step toward reducing them in the coming months policy statement This eased inflation concerns along with other risks to the economy and removed a long-standing reference to possible further rises in borrowing costs.
The US central bank’s latest policy statement gave no indication that a rate cut was imminent, and indeed the policy-making Federal Open Market Committee stated, “It does not expect that it would be appropriate to lower the target range until it has greater confidence that inflation is moving steadily toward 2%.” , “The Fed’s Inflation Target.
“Inflation has moderated over the past year but remains elevated,” the Fed said in a statement after the two-day meeting, reiterating that officials “remain extremely attentive to inflation risks.”
This language will be a blow to investors who are expecting a rate cut in early March.
But the Fed also acknowledged concerns about the employment side of its mission, opening the door to lowering the policy rate if inflation, as expected, continues to ease in the coming months.
The risks to meeting both employment and inflation targets are “moving toward a better balance,” the Fed said, ending nearly two years in which the central bank’s bias has shifted toward taking rates higher and toward the risks posed by rising prices. Seen bent over. ,
“When considering any adjustment to the target range for the federal funds rate, the Committee will carefully assess incoming data, the emerging outlook, and the balance of risks,” the FOMC said.
The Fed’s prior statement, issued on December 13, had laid out conditions under which it would consider “any additional policy determinations”, which did not include any consideration of a rate cut.
No guide for investors
The latest statement, which left the Fed’s benchmark overnight interest rate in the range of 5.25%-5.50%, was approved unanimously. Fed Chairman Jerome Powell is scheduled to hold a press conference at 2:30 pm EST (1930 GMT) to elaborate on the policy decision and economic outlook.
Although the statement stopped short of telling investors and the public about the timing and pace of the upcoming rate cut, it marked the current policy rate as the peak of an aggressive monetary tightening cycle that began in March 2022 when Price pressure was increasing. Several months later, inflation reached its highest level in 40 years.
Inflation is now running below the Fed’s target on a seven-month basis, while US economic growth and the job market remain largely intact.
Economic activity “is expanding at a solid pace,” the Fed said Wednesday. Job gains “remain strong, and the unemployment rate remains low.”
Fed officials did not release new economic projections at their meeting this week. As of the December 12-13 meeting, policymakers had envisioned a policy rate cut of 75 basis points over the course of the year, but not until more data shows inflation has continued its downward trend. Until now they have been reluctant to commit to a start date. ,
The US central bank’s latest policy statement gave no indication that a rate cut was imminent, and indeed the policy-making Federal Open Market Committee stated, “It does not expect that it would be appropriate to lower the target range until it has greater confidence that inflation is moving steadily toward 2%.” , “The Fed’s Inflation Target.
“Inflation has moderated over the past year but remains elevated,” the Fed said in a statement after the two-day meeting, reiterating that officials “remain extremely attentive to inflation risks.”
This language will be a blow to investors who are expecting a rate cut in early March.
But the Fed also acknowledged concerns about the employment side of its mission, opening the door to lowering the policy rate if inflation, as expected, continues to ease in the coming months.
The risks to meeting both employment and inflation targets are “moving toward a better balance,” the Fed said, ending nearly two years in which the central bank’s bias has shifted toward taking rates higher and toward the risks posed by rising prices. Seen bent over. ,
“When considering any adjustment to the target range for the federal funds rate, the Committee will carefully assess incoming data, the emerging outlook, and the balance of risks,” the FOMC said.
The Fed’s prior statement, issued on December 13, had laid out conditions under which it would consider “any additional policy determinations”, which did not include any consideration of a rate cut.
No guide for investors
The latest statement, which left the Fed’s benchmark overnight interest rate in the range of 5.25%-5.50%, was approved unanimously. Fed Chairman Jerome Powell is scheduled to hold a press conference at 2:30 pm EST (1930 GMT) to elaborate on the policy decision and economic outlook.
Although the statement stopped short of telling investors and the public about the timing and pace of the upcoming rate cut, it marked the current policy rate as the peak of an aggressive monetary tightening cycle that began in March 2022 when Price pressure was increasing. Several months later, inflation reached its highest level in 40 years.
Inflation is now running below the Fed’s target on a seven-month basis, while US economic growth and the job market remain largely intact.
Economic activity “is expanding at a solid pace,” the Fed said Wednesday. Job gains “remain strong, and the unemployment rate remains low.”
Fed officials did not release new economic projections at their meeting this week. As of the December 12-13 meeting, policymakers had envisioned a policy rate cut of 75 basis points over the course of the year, but not until more data shows inflation has continued its downward trend. Until now they have been reluctant to commit to a start date. ,
