Federal Reserve officials agreed to hold interest rates steady at a 22-year high and signaled they may wait to cut rates longer than the market currently expects.
Officials held the central bank’s benchmark federal funds rate unchanged Wednesday at a range between 5.25 percent and 5.5 percent, the level it reached last July after 10 consecutive hikes, following a run of mixed economic data that revealed moderating price pressures and a cooling of the labor market even while the economy continues to grow quickly.
The Fed’s statement indicates that it remains patient on rate cuts and is still looking for more data to build confidence that inflation is moving toward its target. This may throw some cold water on investors’ expectations of a September cut.
“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 end of its two-day meeting.
The Fed’s next scheduled meeting is in September. After that, there are two more cuts on the calendar this year, in November and December. Prior to the meeting, financial markets had been indicating a 100 percent chance that the Fed would cut in September and very high odds that the Fed would cut one or two more times this year.
