The Federal Reserve (Fed) has announced that it will not cut interest rates until inflation slows down to 2%. Jerome Powell, head of the central bank in the United States, provided reassurance during a press conference that there will be no immediate increase in the Fed’s policy rate. According to Powell, the next move in the policy rate is more likely to be a hold rather than an increase.
The Fed has stated that cutting interest rates will not happen until they are confident that inflation is trending downwards to the 2% target. Building this confidence may take longer than initially expected. The ultimate goal is to maintain a steady rate of inflation at 2%. In March, consumer prices in the US rose by 3.5% year-on-year, as reported by the Department of Labor statistics.
During their recent meeting, the Federal Reserve kept the key interest rate unchanged, falling within the 5.25-5.50% range. This decision was unanimously agreed upon citing lack of progress towards achieving the 2% inflation target as the primary reason for maintaining the current interest rate. The Fed acknowledged the uncertain economic outlook and emphasized their commitment to closely monitoring inflation risks.
