Fed Holds Off on Interest Rate Cut as Inflation Remains High

The Fed, led by Jerome Powell, has stated that it will not be cutting interest rates until inflation slows down to 2%. Powell assured the public that there will be no increase in the Fed’s policy rate in future meetings and that a rate hike is unlikely to be the next move.

In March, consumer prices in the United States rose by 3.5% year-on-year, surpassing the desired 2% level. According to Powell, developing the necessary confidence in inflation slowing down to the 2% target will take longer than expected. However, at its recent meeting, the Fed decided to maintain its key interest rate in the range of 5.25–5.50%, citing a lack of progress towards the inflation target as the reason for the decision.

The central bank remains cautious about the economic outlook and inflation risks, emphasizing the need to achieve the long-term goal of 2% inflation. Overall, the Fed is holding off on cutting interest rates until there is a significant slowdown in inflation to meet its target, ensuring stability and economic growth in the United States.