The Federal Reserve, as widely predicted, held its key interest rate steady once again on Wednesday. The Fed's benchmark rate remains at a 23-year-high of between 5.25% and 5.5%. While nobody was expecting a big surprise with interest rates Wednesday, investors were waiting for an update on projected rate cuts. The central bank projected just one cut this year, down from a prediction of three in March, though the views of individual members differed, the New York Times reports. Eight policymakers predicted two rate cuts before the end of the year, seven predicted one, and four expected that there would be no cuts at all.
The central bank, which has kept its key interest rate at the same level since July last year, said the economy is growing at a steady pace and hiring has "remained strong," the AP reports. "Inflation has eased over the past year but remains elevated," the Fed said, per CNBC. In a change from May, when it said there had been a lack of "further progress" in taming inflation, the Fed said there had been "modest further progress" toward its target of bringing inflation down to 2%. The Fed now expects to make four rate cuts next year, up from a previous prediction of three, the Times reports.
At a press conference, Fed chair Jerome Powell said officials agree that the timeline for rate cuts will be "data-dependent," the AP reports. "We'll need to see more good data to bolster our confidence that inflation is moving sustainably toward 2%," he said. Powell said the Fed is watching signs that household finances have become more strained, the Times reports. He said most households appear to be in shape, though he acknowledged that lower-income households are being hit harder by high interest rates. The Fed's next meeting is in July but analysts don't expect a rate cut before September at the earliest. Hours before the Fed's statement Wednesday, a report showed that inflation slowed in May.
This story has been updated with Powell's remarks. (More Federal Reserve stories.)
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