Fed says more ‘confidence’ needed on inflation front before rate cuts can start

The Federal Reserve left interest rates unchanged on Wednesday but took a major step towards lowering them in coming months in a policy statement that tempered inflation concerns with other risks to the economy and dropped a longstanding reference to possible further hikes in borrowing costs.

The U.S. central bank’s latest policy statement gave no hint that a rate cut was imminent, and indeed said the policy-setting Federal Open Market Committee “does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%,” the Fed’s inflation target.

“Inflation has eased over the past year, but remains elevated,” the Fed said in the statement after a two-day meeting, restating that officials “remain highly attentive to inflation risks.”

Speaking after the FOMC meeting in a press conference, Fed Chair Jerome Powell cautioned that the Fed’s struggle to lower inflation is not over, noting “we are not declaring victory, we think we still have a way to go.”

 

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