Fed holds rates steady at 23-year high, projects just one cut this year
The announcement comes after a Labor Department report showed that inflation slowed more than expected in May, even as prices remained high for millions of Americans.
The Federal Reserve on Wednesday held interest rates steady for the seventh straight time and scaled back the outlook for rate reductions later this year as high inflation lingers.
New quarterly economic projections laid out after the meeting show that a majority of Fed officials who participated expect rates to fall to just 5.1% by the end of 2024, suggesting there will only be one quarter-point rate cut this year – a sharp reversal from the three they had predicted in March.
In their post-meeting statement, policymakers left the door open to rate cuts but stressed they need «greater confidence» inflation is coming down before lowering borrowing costs.
While inflation has fallen considerably from its peak, price pressures have proven more stubborn than expected. The Fed's favorite gauge shows that inflation is running at a 2.7% pace — well above the central bank's 2% goal. When excluding food and energy, underlying core inflation came in even hotter at 2.8%.
RENT PRICES ARE STAGNATING, SUGGESTING HIGH INFLATION MAY STICK AROUND
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)
«We want to gain further confidence, certainly more good inflation readings will help with that. I'm not going to be specific about how many, because it's going to be not just the inflation readings, it's going to be the totality of the data,» Fed Chair Jerome Powell told reporters at the post-meeting press conference in Washington.
He added: «We see today's report as
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