Jerome Powell spoke after the Fed announced its interest rate decision.
of Federal Reserve The Fed on Wednesday kept interest rates unchanged at their highest levels in more than two decades but signaled that recent developments in inflation mean it may soon lower borrowing costs.
The widely expected decision will leave interest rates in the 5.25% to 5.5% range they have been in since July last year.
Policymakers made some key changes to the statement they released after two days of meeting in Washington. Officials described inflation as “moderately elevated,” a big change from previous statements in which they described it as “elevated.” The statement also said central bank officials were focusing on employment and inflation risks, rather than just inflation risks.
“The Committee judges that the risks to achieving its employment and inflation objectives continue to be more balanced,” the statement said. “The economic outlook remains uncertain, and the Committee is paying close attention to risks to both of its dual mandates.”
Federal Reserve Chairman Jerome Powell attends a press conference in Washington, DC on May 1, 2024. (Photo by Liu Jie/Xinhua via Getty Images)
Still, policymakers retained language in their statement suggesting they need “greater confidence” that inflation is falling before easing policy.
Policy makers will raise interest rates sharply in 2022 and 2023, Slow down the economy And then there’s inflation. Officials are now struggling with when to ease off the brakes. They entered 2024 planning to cut rates at least three times this year, but have repeatedly postponed those plans even as inflation eased in April, May and June.
“The Fed is poised to start cutting rates at its next meeting in September,” said Ryan Detrick, chief market strategist at Carson Group. “Inflation has improved significantly and wages have recovered in recent months. The reality is that inflation is slowing and the Fed doesn’t need rates this high any more.”
| Ticker | safety | last | change | change % |
|---|---|---|---|---|
| Me: DJI | Dow Jones Average | 41066.25 | +322.92 |
+0.79% |
| I:Comp | Nasdaq Composite Index | 17596.923613 | +449.51 |
+2.62% |
| SP500 | S&P 500 | 5530.92 | +94.48 |
+1.74% |
When interest rates rise, they tend to push up interest rates on consumer and business loans, forcing employers to cut spending and slowing the economy. Rising rates have pushed the average interest rate on a 30-year mortgage above 8% last year for the first time in decades. The cost of all kinds of borrowing, including home equity loans, auto loans and credit cards, has also soared.
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