Fed holds rates steady as inflation casts doubt on future cuts
The central bank's interest rate decision comes as inflation has hit record highs and grappled Americans over the last few years.
The Federal Reserve on Wednesday held interest rates steady for the sixth straight time after a string of disappointing inflation readings dimmed the odds of cuts later this year.
The widely expected decision – which left interest rates unchanged at a range of 5.25% to 5.5%, the highest level in 23 years – comes amid signs that progress on inflation is stalling, or even starting to reverse.
In their post-meeting statement, policymakers left the door open to rate cuts but stressed they need «greater confidence» inflation is coming down before easing policy.
«In recent months, there has been a lack of further progress toward the committee’s 2 percent inflation objective,» the statement added.
Federal Reserve Chair Jerome Powell holds a press conference at the end of the two-day Federal Open Market Committee (FOMC) meeting at the Federal Reserve in Washington, DC on March 20, 2024. (Photo by Mandel Ngan/ AFP via Getty Images / Getty Images)
While inflation has fallen considerably from its peak, progress has largely flatlined since the summer.
Policymakers raised interest rates sharply in 2022 and 2023, approving 11 rate increases in the hopes of crushing inflation and cooling the economy. In the span of just 16 months, interest rates surged from near zero to above 5%, the fastest pace of tightening since the 1980s.
Hiking interest rates tends to create higher rates on consumer and business loans, which then slows the economy by forcing employers to cut back on spending. Higher rates have helped push the average rate on 30-year mortgages above 8% for the first time in decades. Borrowing costs
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