The Fed Holds Interest Rates. The United States central bank or Federal Reserve (The Fed) maintained its benchmark interest rate, but Second Jerome Powell dismissed hopes that cuts would begin in March 2024.
At the Federal Open Market Committee (FOMC) meeting which ended Wednesday (31/1/2024) US time, the Fed decided to maintain the target range for the federal funds rate (FFR) benchmark interest rate at 5.25%-5.5%.
However, the FOMC expressed no rush to cut interest rates immediately, until it gained greater confidence that inflation is moving sustainably towards the 2% target. Although Powell acknowledged the dramatic decline in inflation seen in recent months, he repeatedly emphasized the need to see more data confirming the downward trend.
Powell also emphasized that the Fed is ready to maintain the target range for the FFR benchmark interest rate for longer if necessary. Apart from maintaining interest rates, the Fed also reiterated plans to continue reducing its balance sheet by US$95 billion per month.
Powell said that Fed officials plan to begin in-depth discussions on the Fed’s balance sheet at their March 2024 meeting. At the FOMC meeting, Fed officials said that the risks to achieving employment and inflation goals were moving in a better direction.
The Fed Holds Interest Rates, Fed officials changed their description of economic activity. Following stronger-than-expected economic growth in the fourth quarter, the Fed described economic activity as expanding at a solid pace.
Among other changes to the statement, the committee removed language that had been included in some form since last March and said the banking system was healthy and resilient.
