Federal Reserve Holds Rates for Seventh Time
The Federal Reserve has decided to keep its main interest rate the same for the seventh time in a row. This choice comes as inflation stays higher than the bank’s target and as signs show the job market is slowing down.
Interest Rate Remains at 5.3%
The Fed’s main short-term interest rate remains around 5.3%. This is the highest level it has been in 23 years. The last time the Fed raised interest rates was in July 2023. Earlier increases started in March 2022 to help bring down inflation.
Fed’s Statement on Inflation and Rate Cuts
In a statement, the Federal Reserve said it 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%.
Fewer Rate Cuts Expected This Year
Fed officials also shared new predictions. They now plan to cut interest rates only once this year. In March, they had suggested rates might be cut three times. This new idea shows they are worried that inflation, while lower than before, is still above their 2% goal.
Inflation and Jobs Update
The Fed’s favorite way to measure inflation showed a 2.7% increase in April compared to a year ago. This is still above the target. Meanwhile, the job market has slowed, with unemployment rising to 4% in May. This is the first time in over two years that the rate has reached this level.
Comments from Fed Chair Jerome Powell
Fed Chair Jerome Powell spoke at a news conference about this decision. He explained that the Federal Reserve is trying to balance two risks: lowering interest rates too early could make inflation rise again, but waiting too long could hurt the job market even more.
We’re very much aware that we have two-sided risks now, Powell said. We’re trying to balance those as best we can.
Outlook for Rate Cuts
Most economists believe the central bank could start lowering interest rates in September. However, this depends on what happens next with inflation and employment numbers.
The Federal Reserve has decided to keep its main interest rate the same for the seventh time in a row. This choice comes as inflation stays higher than the bank’s target and as signs show the job market is slowing down.
Interest Rate Remains at 5.3%
The Fed’s main short-term interest rate remains around 5.3%. This is the highest level it has been in 23 years. The last time the Fed raised interest rates was in July 2023. Earlier increases started in March 2022 to help bring down inflation.
Fed’s Statement on Inflation and Rate Cuts
In a statement, the Federal Reserve said it 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%.
Fewer Rate Cuts Expected This Year
Fed officials also shared new predictions. They now plan to cut interest rates only once this year. In March, they had suggested rates might be cut three times. This new idea shows they are worried that inflation, while lower than before, is still above their 2% goal.
Inflation and Jobs Update
The Fed’s favorite way to measure inflation showed a 2.7% increase in April compared to a year ago. This is still above the target. Meanwhile, the job market has slowed, with unemployment rising to 4% in May. This is the first time in over two years that the rate has reached this level.
Comments from Fed Chair Jerome Powell
Fed Chair Jerome Powell spoke at a news conference about this decision. He explained that the Federal Reserve is trying to balance two risks: lowering interest rates too early could make inflation rise again, but waiting too long could hurt the job market even more.
We’re very much aware that we have two-sided risks now, Powell said. We’re trying to balance those as best we can.
Outlook for Rate Cuts
Most economists believe the central bank could start lowering interest rates in September. However, this depends on what happens next with inflation and employment numbers.