Powell likely to underscore inflation concerns even as Fed leaves key rate unchanged

abcnews.go.com:

For the first time in nearly two years, the Federal Reserve is set Wednesday to keep its key short-term interest rate unchanged for a second straight policy meeting — the clearest sign to date that the Fed is edging closer to the end of its rate-hiking...

WASHINGTON — For the first time in nearly two years, the Federal Reserve is set Wednesday to keep its key short-term interest rate unchanged for a second straight policy meeting — the clearest sign to date that the Fed is edging closer to the end of its rate-hiking campaign.

The Fed is standing pat, for now, in part because the economy has been moving mostly in the direction that Chair Jerome Powell has hoped for: Inflation has tumbled, even though hiring, consumer spending and economic growth have remained robust. A widely predicted recession hasn't materialized.

But the deceleration of inflation has slowed, and solid economic growth could keep inflation elevated or even send it higher. As a result, Powell and other Fed officials aren't yet willing to take a final rate hike off the table. At a new conference Wednesday, Powell will likely highlight the progress the central bank has made while still underscoring that inflation remains too high and that future rate hikes might be needed to finish the job of slowing inflation to the Fed's 2% target.

“The Fed has to talk tough on inflation," said Michael Arone, chief investment strategist at State Street Global Advisors. “They have no other choice if they want to keep their inflation-fighting credibility intact.”.

Since March 2022, the Fed has raised its key rate from near zero to roughly 5.4% in its effort to tame inflation, which reached a four-decade high in 2022 as the economy roared out of the pandemic recession.