Fed Holds Off on Rate Cuts as Inflation Remains High

The Federal Reserve, or the Fed, has announced that it will not cut interest rates until inflation falls to 2%. Jerome Powell, the head of the central bank in the US, reassured investors during a press conference that there will be no immediate increase in the Fed’s policy rate. According to Powell, the next move in the policy rate is more likely to be a hold rather than an increase.

Powell explained that building confidence that inflation is trending downwards to the 2% target may take longer than initially expected. This decision was made after March saw consumer prices in the US rise by 3.5% year-on-year, as reported by the Department of Labor statistics. The Federal Reserve opted to keep the key interest rate unchanged during their recent meeting, falling within the 5.25-5.50% range.

The Fed acknowledged that maintaining a steady rate of inflation at 2% is their ultimate goal and emphasized their commitment to closely monitoring inflation risks. Despite this decision, Powell also noted that they are open to making adjustments if necessary based on new data and economic developments.