Federal Reserve officials left interest rates unchanged at their July meeting, as economists had expected, and hinted that recent progress in lowering inflation could enable them to cut interest rates soon.
The Fed decided on Wednesday to hold interest rates steady at about 5.3 percent — a two-decade high where they have remained for a year now.
Notably, though, officials also tweaked their post-meeting policy statement to call price increases only “somewhat elevated” and to underscore that officials are attentive not just to the risk of lingering inflation but also to the threat of a job market slowdown.
Central bankers did not release a fresh set of quarterly economic projections at this meeting. Jerome H. Powell, the Fed chair, will deliver a news conference, which is scheduled to start at 2:30 p.m.
The Fed’s decision leaves all eyes on Sept. 18, when policymakers will next vote on interest rates. Investors widely expect them to cut borrowing costs at that gathering, and then to cut rates a second and even third time before the end of the year.
The Fed’s statement on Wednesday is likely to reinforce expectations for a coming rate reduction, because officials used it to stress both that inflation is cooling and that they are increasingly focusing on the health of the labor market. “The economic outlook is uncertain, and the committee is attentive to the risks to both sides of its dual mandate,” the Fed said in its statement, replacing previous language that said the Fed was “highly attentive to inflation risks.”
As of their June economic projections, Fed forecasts implied that central bankers could cut roughly every other meeting once they got started. That would lower rates to 4.1 percent by the end of next year and 3.1 percent by the end of 2026.
Fed officials will release their next set of economic projections after their September meeting, which will give a hint at whether they still think that pace of rate cuts is appropriate.
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