Fed holds interest rates steady, as officials eye one cut this year

[cigaretteman]

The Federal Reserve kept interest rates steady on Wednesday, as officials hold out for more confidence that their fight against inflation is still on track.
The move, which was widely expected, came on the heels of fresh data showing inflation cooled in May. After a bumpy start to the year, the report brought a welcome dose of encouragement, beating analysts’ expectations and lifting financial markets. And even though Fed officials still don’t know exactly when they’ll cut interest rates for the first time in years, they seem to be getting closer.


Get a curated selection of 10 of our best stories in your inbox every weekend.

A fresh set of economic projections showed the median number of Fed officials expect just one cut by the end of 2024. But there’s clearly debate within the central bank’s 19-member policymaking body: Eight officials penciled in two cuts, and four expect no cuts at all. In a sharp pivot from just a few months ago, no one expected three cuts.



Policymakers were also slightly more pessimistic than they had been on inflation and now expect their preferred inflation gauge to end the year at 2.6 percent, up from 2.4 percent. They held forecasts for overall growth (2.1 percent) and the unemployment rate (4 percent) steady.

​

“The economic outlook is uncertain, and the [Fed] remains highly attentive to inflation risks,” officials wrote in a statement.

https://www.washingtonpost.com/business/2024/06/12/cpi-fed-inflation-interest-rates/

 

[QChawks]

 

[Torg]

If we had a Republican administration they would have lowered the rates.

 

[seminole97]

Well, federal debt has increased $1,542,086,052,452.70 so far since October 1st last year, so we've got that going for us.

 

[joelbc1]

If we had a Republican administration they would have lowered the rates.

And in the long run, what good would that accomplish? Right now, value has to be restored to our dollar… and that happens when people pay more to use it (higher interest rates). Rates today are hardly outlandish…and the economy is quite healthy, despite the best spin FOX and Trump can give to the contrary.

 

[luvmyhawks]

If we had a Republican administration they would have lowered the rates.

No.

And I have no idea why they keep discussing rate cuts. It simply isn't happening until we are below 2% for a sustained period. I am just not seeing that happen this year. Hope I am wrong.

 

[joelbc1]

No.

And I have no idea why they keep discussing rate cuts. It simply isn't happening until we are below 2% for a sustained period. I am just not seeing that happen this year. Hope I am wrong.

We are trying to end the problem of artificially low rates have had on the US economy (inflation) for approximately 15 years. Why jump back into that well again?

 

[seminole97]

No.

And I have no idea why they keep discussing rate cuts. It simply isn't happening until we are below 2% for a sustained period. I am just not seeing that happen this year. Hope I am wrong.

Because spending over a trillion on debt interest is a bad headline politicians would to see go away.

Witness Europe:

The ECB decided to cut rates by 25 basis points the same day it elevated its own inflation estimates for 2024 and 2025.
You simply cannot make this up. If you wanted unmistakable proof of the lack of independence of central banks, this is it. The ECB only has one mandate, price stability, and has violated it for nearly four years.
Why?
The purpose is to fund the biggest expansion of the government’s size since the euro’s inception and uphold the delusion of a sovereign debt bubble.
We must remember that the ECB has not implemented a restrictive policy at all. It has kept the “anti-fragmentation tool,” which disguises the real risk of sovereign issuers and should be called the “anti-market tool.”
This has allowed governments that have increased their fiscal imbalances to keep an artificially low-risk premium versus the German bond. Furthermore, the ECB continues to repurchase part of the bond maturities and the EU launched the Next Generation Fund, which is another massive money-printing exercise.
The ECB has only used rate increases as a real restrictive tool. Due to higher financing costs, families and small businesses have had to bear the full negative impact of the ECB policy. Meanwhile, governments have not limited their money printing through deficit spending, nor have they simply consolidated the extraordinary expenditures of 2020. In some cases, they have even increased spending beyond that “unique” figure.