Federal Reserve officials agreed on Wednesday to hold interest rates steady for the sixth consecutive meeting, signaling that they are willing to keep rates at the highest level in more than two decades for longer than previously expected and noting that progress on bringing down inflation has stalled.
The central bank left its benchmark federal funds rate unchanged in a range between 5.25 percent and 5.5 percent, as it awaits more evidence that inflation is sustainably falling to its two percent target.
That changed two meetings later in December when the Fed signaled that it was preparing to cut rates three times in 2024. Markets moved even further, reflecting an expectation for twice as many cuts.
In January, the Fed sought to moderate those expectations by saying that rate cuts were not imminent and that officials needed more convincing evidence that inflation was returning to the Fed’s target. In the months that followed, inflation re-ignited despite rates staying at a level that Fed officials believe are high enough to restrain the economy.
Wednesday’s statement acknowledged the upward thrust of inflation.
“Inflation has eased over the past year but remains elevated. In recent months, there has been a lack of further progress toward the Committee’s 2 percent inflation objective,” the Fed said in its official statement following the two-day meeting of the Federal Open Market Committee, the central bank’s monetary policy board.
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