Powell on Rate Cuts: 'Path Forward Is Uncertain'

Federal Reserve holds key rate steady
By Rob Quinn,  Newser Staff
Posted Jan 31, 2024 1:04 PM CST
Updated Jan 31, 2024 2:20 PM CST
Fed Holds Rates Steady for 4th Meeting in a Row
Television screens on the floor of the New York Stock Exchange show Powell's news conference, Wednesday, Jan. 31, 2024.   (AP Photo/Richard Drew)

This story has been updated with Powell's remarks. The Federal Reserve, surprising nobody, left its benchmark interest rate unchanged Wednesday at between 5.25% and 5.5%, its highest in 23 years. This was the fourth Fed meeting in a row that resulted in no change to the key rate, but while raising the rate was seen as a possibility at earlier meetings, analysts are now looking for signs that cuts are on the way, the Wall Street Journal reports. Inflation has been falling, and some investors are predicting a rate cut at the next meeting in March, though Fed officials have made it clear that they're not in a big hurry to cut interest rates while the economy is thriving.

Earlier this month, Fed governor Christopher Waller said that with inflation slowing and employment remaining strong, the economic landscape is "about as good as it gets." After its December meeting, the Fed predicted there would be three rate cuts in 2024. Vanguard chief global economist Joe Davis told clients Tuesday that predictions of a March rate cut might be "overly optimistic," NBC News reports. "It likely will be midyear before policymakers are confident that they have reined in inflation sufficiently to start cutting their target for short-term interest rate." A rate cut in May or June may be more likely, but it could happen sooner if the job market weakens, reports the AP.

In remarks after the interest rate announcement, Fed Chair Jerome Powell didn't completely rule out a March cut in rates, but suggested it was unlikely, saying the central bank wants to be sure that inflation is slowing consistently, the AP reports. "Inflation is still too high, ongoing progress in bringing it down is not assured, and the path forward is uncertain," Powell said, per CNBC. "I want to assure the American people we are fully committed to returning inflation to our 2% goal." (More Federal Reserve stories.)

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