Interest Rates to remain unchange for now...
What You Need to Know
On Tuesday, June 12th, The Federal Reserve held interest rates steady and pushed out the start of rate cuts to perhaps as late as December as policymakers sketched out their view of an economy that remains virtually unchanged across its major dimensions for years to come
The central bank kept the federal funds rate — or what banks charge each other for short-term loans — in a range of 5.25% to 5.5%. It has remained at that level, the highest in 23 years, since July of 2023
The Fed has been wary of cutting rates due to stubborn inflation, which is showing some signs of easing yet remains above the central bank's 2% annual target. Earlier on Wednesday, the government said consumer prices in May rose 3.3% on an annual basis, showing some easing from April, when the pace stood a tick higher at 3.4%
In its statement, the Fed said there has been some "modest" progress of late in lowering inflation closer to its target, but added that the pace of price increases "remains elevated." Inflation-weary consumers will likely have to bear higher borrowing costs throughout 2024, with the Fed adding that it's penciling in just one rate cut this year, down from the three reductions it had earlier forecast.
With growth and unemployment lodged at levels better than the U.S. central bank considers sustainable in the long run, Fed Chair Jerome Powell said policymakers were content to leave rates where they are until the economy sends a clear signal that something else is needed - through either a more convincing decline in price pressures or a jump in the unemployment rate.
So far, Powell noted in a press conference after the end of a two-day policy meeting, inflation had fallen without a major blow to the economy, and he said there was no reason to think that can't go on.
The Fed raised rates aggressively in 2022 and 2023 to curb inflation that had surged to a 40-year high in the aftermath of the COVID-19 pandemic.
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