Fed holds interest rates steady at 23-year high, but opens the door to reducing rates
Jerome Powell speaks after Fed announces interest rate decision.
The Federal Reserve on Wednesday held interest rates steady at the highest level in more than two decades, but hinted that recent progress on inflation could soon prompt them to reduce borrowing costs.
The widely expected decision left interest rates unchanged at a range of 5.25% to 5.5%, where they have sat since last July.
Policymakers made several key changes to the statement released after their two-day meeting in Washington. Officials described inflation as «somewhat elevated,» a notable shift from previous statements when they called it «elevated.» The statement also said that central bank officials are focused on employment and inflation risks, rather than just inflation risks.
«The Committee judges that the risks to achieving its employment and inflation goals continue to move into better balance,» the statement said. «The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate.»
Federal Reserve Chair Jerome Powell attends a press conference in Washington, D.C. on May 1, 2024. (Photo by Liu Jie/Xinhua via Getty Images / Getty Images)
Still, policymakers left language in the statement that suggested they need «great confidence» inflation is coming down before easing policy.
Policymakers raised interest rates sharply in 2022 and 2023 in a bid to slow the economy and cool inflation. Officials are now grappling with when they should take their foot off the brake. They entered 2024 expecting to reduce rates at least three times this year, but have repeatedly pushed back their plans, even though inflation eased in April, May and June.
«The Fed is setting the table for interest rate cuts starting at
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