Fed Holds Rates Steady, Signals No Rate Cuts Soon

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A screen displays news about the interest rate as traders work on the floor at the New York Stock Exchange in New York, May 1, 2024. The Federal Reserve’s decision to keep its benchmark rate at a two-decade high should have ripple effects across the economy. Mortgage rates, credit card rates, and auto loan rates will all likely maintain their highs, with consequences for consumer spending. (AP Photo/Seth Wenig, file)
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WASHINGTON (AURN News) – The Federal Reserve left interest rates unchanged on Wednesday, maintaining its aggressive stance in the battle against stubbornly high inflation despite the growing economic risks. In a widely expected move, the central bank’s Federal Open Market Committee (FOMC) kept its benchmark federal funds at 5.25% to 5.5%, which is still the highest level since 2007. However, the Fed signaled it is not ready to pivot from its current inflation-fighting monetary policy, pushing back against market expectations for rate cuts any time soon.

The decision underscores the Fed’s resolve to tame the highest inflation in decades, even as high borrowing costs increase the risk of an economic downturn. While overall inflation has gone down from last summer, it still remains well above the Fed’s 2% target, driven by rapid price increases for housing, food, and other goods and services.

“The 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 percent,” the FOMC said in a statement.

Wednesday’s pause is a continuation of pauses that began in December 2023 when the Fed first chose not to raise rates, following an aggressive tightening cycle of 11 consecutive hikes. The burden of rapidly rising prices has been particularly hard for many Americans and especially the Black community. As the 2024 election campaign heats up, soaring consumer costs are expected to remain a central issue, with both Trump and Biden offering their vastly different visions to provide much-needed economic relief.


Click play to listen to the AURN News report from Jamie Jackson:

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