The Fed kept interest rates unchanged at the highest in more than two decades. Investors are betting it will start to lower rates at its next meeting in September.
The Federal Reserve held interest rates steady Wednesday but signaled that rate cuts could come soon if inflation continues to moderate.
The Federal Reserve held interest rates steady Wednesday, but investors are betting that the first rate cut in more than four years could come soon, if inflation continues to moderate.. While that's higher than the Fed's target of 2%, it suggests inflation continues to move in the right direction, clearing the way for the Fed to lower borrowing costs in the near future.
"While I don't believe we have reached our final destination, I do believe we are getting closer to the time when a cut in the policy rate is warranted," Waller told an audience at the Federal Reserve Bank of Kansas City. For now, Fed policymakers voted unanimously to keep their benchmark rate between 5.25 and 5.5%, where it's been for the last year. That matches the highest level in more than two decades, making it more expensive to get a car loan, finance a business or carry a balance on your credit card.While Fed officials previously worried that cutting interest rates prematurely might rekindle inflation, they're increasingly confident that price stability is close to being restored.
"Job gains have moderated, and the unemployment rate has moved up but remains low," Fed policymakers said in their statement., showing employers' labor costs are growing more slowly. The cost of wages and benefits rose 4.1% for the twelve months ending in June, compared to 4.5% the previous year.Scott Horsley is NPR's Chief Economics Correspondent. He reports on ups and downs in the national economy as well as fault lines between booming and busting communities.
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