The Federal Reserve announced this afternoon that once again it has decided to hold interest rates where they are, but did not say when it will start cutting rates, which had been expected by some observers to begin happening over the summer. Today marks the fifth straight time the Fed has decided not to continue raising interest rates. The Fed announced this afternoon that it was not going to cut rates right now because inflation has yet to reach the 2% target rate it wants and it needs to wait and see whether inflation will continue to moderate from its present level in the area of 3.1%
“Recent indicators suggest that economic activity has been expanding at a solid pace,” the Fed said in a statement. “Job gains have remained strong, and the unemployment rate has remained low. Inflation has eased over the past year but remains elevated.”
The Fed did say that its judgment indicates the risks to achieving its employment and inflation goals are moving into better balance but that the economic outlook is uncertain.
“In considering any adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks,” the Fed said. “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%. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in its previously announced plans. The Committee is strongly committed to returning inflation to its 2% objective.”
