As anticipated, the US Federal Reserve has held benchmark rates steady while expecting three rate cuts later in 2024.
The Federal Open Market Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent while reiterating its commitment to achieving an inflation rate of 2%.
The Fed said it would continue reducing its holdings of Treasury securities and agency debt as well as mortgage-backed securities.
The Committee voted unanimously in its decision to hold rates steady.
There were few changes in the messaging by the Fed as, once again, Chairman Jerome Powell stated their decision would be data-driven.
Chair Powell did say that strong job growth was not in itself a reason to be concerned about rising inflation. Powell said they had 9 months of 2.5% inflation and two months of “bumpy inflation.” He said it is very important they do get inflation down further.
Powell said that demand is cooling off from high levels, and hiring rates are diminishing.
Asked about a letter from several US Senators demanding the Fed cut rates, Chair Powell said while they respect Congress, their mandate is for maximum employment and price stability, and that is their mission. “That is how we can best serve the public,” said Powell.
Currently, the Fed expects a 2024 unemployment rate of 4%, which will tick up slightly in 2025.