The Federal Reserve held its interest rate target steady on Wednesday, saying that it did not anticipate rate reductions in the near future.
“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 Fed said in a statement released at the conclusion of its two-day monetary policy meeting.
Financial markets had been pricing in around a forty-percent chance that the Fed would cut its interest rate target at its next meeting in March and a near certainty that the target would be lower by May. Markets have been pricing in five or six cuts this year.
The Fed’s statement appears to be aimed at pushing the markets off those views.
The statement also challenges the assertion by many economists, particularly those associated with Democrat politics and the American left, that it the war against inflation has already been won.
Missed this, but the NY Fed measure of underlying inflation confirms that the war is over, and we won pic.twitter.com/d64KKPzwL6
— Paul Krugman (@paulkrugman) January 30, 2024
“Recent indicators suggest that economic activity has been expanding at a solid pace,” the Fed said in its statement. “Job gains have moderated since early last year but remain strong, and the unemployment rate has remained low. Inflation has eased over the past year but remains elevated.”
The Fed has left its benchmark interest rate target unchanged at 5.25 percent to 5.50 percent since it last raised it in July.
