The Federal Reserve left interest rates unchanged on Wednesday and signaled only one cut by the end of the year.
Federal Reserve officials left interest rates unchanged in their June decision and predicted they would cut borrowing costs just once before the end of the year. The Fed raised its benchmark rate at 11 consecutive meetings between early 2022 and July 2023, pushing borrowing costs up to a more than two-decade high of 5.3 percent. The Fed has held rates steady since -- banking on higher borrowing costs to slow consumer and industry demand enough to quell rapid price increases.
The Fed retreated from its previous forecast of three rate cuts this year, instead saying it anticipates one rate cut in 2024. While Fed officials acknowledged "modest further progress toward the Committee's 2 percent inflation objective," the Fed's economic forecasts showed stubborn inflation in 2024 and a slightly higher unemployment rate in 2025.
According to the FOMC statement:
Recent indicators suggest that economic activity has continued to expand at a solid pace. Job gains have remained strong, and the unemployment rate has remained low. Inflation has eased over the past year but remains elevated. In recent months, there has been modest further progress toward the Committee's 2 percent inflation objective.
The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. The Committee judges that the risks to achieving its employment and inflation goals have moved toward better balance over the past year. The economic outlook is uncertain, and the Committee remains highly attentive to inflation risks.
In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent. In considering any adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks.
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. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities. The Committee is strongly committed to returning inflation to its 2 percent objective.
Read the complete FOMC statement for more information.
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