Inflation report: Fed holds rates at 23-year high

Citing ‘lack of further progress’ on inflation, the Federal Reserve left interest rates unchanged on Wednesday and plans to hold rates steady, according to news reports from Yahoo and other outlets.

Reporting notes that there has been a lack of progress on inflation returning to its 2% target, so the decision is to hold rates at record-high levels until some movement on inflation occurs.

However, Federal Reserve Chairman Jerome Powell said in his press conference that “it is unlikely the next policy move will be a hike.”

At the conclusion of its two-day policy meeting, the central bank voted to keep its benchmark interest rate in a range of 5.25%-5.50%, a 23-year high. The Fed funds rate has been in this range since July 2023.

Fed officials say there has been little further progress towards the 2% inflation objective and reiterated that more clarity in the outlook for inflation returning to target will be needed before cutting rates.

“The committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent,” the statement read.

In his March press conference, Powell suggested that the Fed should cut rates “at some point” this year.

Powell, in his press conference Wednesday, declined to say whether three rate cuts were still an expectation for 2024. He says it will now take longer than expected to be sure inflation is moving down to 2% and he doesn’t know how long that will take.

Sources: Yahoo Finance, Reuters