The U.S. Federal Reserve (Fed) has kept the benchmark interest rate unchanged for the eighth consecutive meeting while suggesting that a rate cut might be possible in September.
The Federal Open Market Committee (FOMC) held the benchmark rate at 5.25% to 5.5%. This unanimous decision maintains the rate at its highest level in 23 years and continues a nearly year-long period of elevated rates.
During this meeting, the FOMC signaled that a rate cut might be on the horizon. The statement highlighted that inflation has made “some progress toward the committee’s goal of 2%,” suggesting that a rate reduction could be considered in September.
The statement described inflation as “somewhat elevated,” a downgrade from the previous term “elevated.”
The committee removed the existing phrase “paying close attention to inflation risks.” It replaced it with “paying attention to the risks to both sides of our dual mandate of price stability and full employment.”
The Fed indicated that it has been more focused over the past year on avoiding a sharp rise in unemployment related to interest rate hikes and slowing inflation.
The statement explained that the economy continues to expand steadily. Job growth has moderated, and while the unemployment rate has risen, it remains low.
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