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Fed holds interest rates steady, as officials eye one cut this year
Source: Washington Post
The Federal Reserve kept interest rates steady on Wednesday, as officials hold out for more confidence that their fight against inflation is still on track.
The move, which was widely expected, came on the heels of fresh data showing inflation cooled in May. After a bumpy start to the year, the report brought a welcome dose of encouragement, beating analysts’ expectations and lifting financial markets. And even though Fed officials still don’t know exactly when they’ll cut interest rates for the first time in years, they seem to be getting closer.
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A fresh set of economic projections showed the median number of Fed officials expect just one cut by the end of 2024. But there’s clearly debate within the central bank’s 19-member policymaking body: Eight officials penciled in two cuts, and four expect no cuts at all. In a sharp pivot from just a few months ago, no one expected three cuts.
Policymakers were also slightly more pessimistic than they had been on inflation and now expect their preferred inflation gauge to end the year at 2.6 percent, up from 2.4 percent. They held forecasts for overall growth (2.1 percent) and the unemployment rate (4 percent) steady.
The move, which was widely expected, came on the heels of fresh data showing inflation cooled in May. After a bumpy start to the year, the report brought a welcome dose of encouragement, beating analysts’ expectations and lifting financial markets. And even though Fed officials still don’t know exactly when they’ll cut interest rates for the first time in years, they seem to be getting closer.
Get a curated selection of 10 of our best stories in your inbox every weekend.
A fresh set of economic projections showed the median number of Fed officials expect just one cut by the end of 2024. But there’s clearly debate within the central bank’s 19-member policymaking body: Eight officials penciled in two cuts, and four expect no cuts at all. In a sharp pivot from just a few months ago, no one expected three cuts.
Policymakers were also slightly more pessimistic than they had been on inflation and now expect their preferred inflation gauge to end the year at 2.6 percent, up from 2.4 percent. They held forecasts for overall growth (2.1 percent) and the unemployment rate (4 percent) steady.
Read more: https://www.washingtonpost.com/business/2024/06/12/cpi-fed-inflation-interest-rates/