The Federal Reserve left interest rates unchanged on Wednesday, but central bankers indicated they’d probably cut rates in the coming months for the first time since 2020.
The move comes as the Fed enters a new phase of policymaking. For almost two years, officials have been focused on raising borrowing costs and keeping them high enough to tame inflation and meaningfully slow the economy. And while that fight is not fully over, it’s clear central bankers feel will feel comfortable loosening their grip as they become more certain that progress will continue.
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“The [Fed] judges that the risks to achieving its employment and inflation goals are moving into better balance,” policymakers wrote in a statement. “The economic outlook is uncertain, and the Committee remains highly attentive to inflation risks.”
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The statement also noted that the central bank doesn’t expect to trim borrowing costs until “it has gained greater confidence that inflation is moving sustainably toward 2 percent,” which is the Fed’s target.
Inflation rose slightly in December as fight to tame prices continues
The Fed’s decision, announced at the end of its two-day policy meeting, keeps the central bank’s benchmark interest rate between 5.25 and 5.5 percent. So far, officials have signaled three rate cuts this year, each of a small quarter-point. But they haven’t dictated exactly when that process will begin.
The move comes as the Fed enters a new phase of policymaking. For almost two years, officials have been focused on raising borrowing costs and keeping them high enough to tame inflation and meaningfully slow the economy. And while that fight is not fully over, it’s clear central bankers feel will feel comfortable loosening their grip as they become more certain that progress will continue.
Get a curated selection of 10 of our best stories in your inbox every weekend.
“The [Fed] judges that the risks to achieving its employment and inflation goals are moving into better balance,” policymakers wrote in a statement. “The economic outlook is uncertain, and the Committee remains highly attentive to inflation risks.”
ADVERTISING
The statement also noted that the central bank doesn’t expect to trim borrowing costs until “it has gained greater confidence that inflation is moving sustainably toward 2 percent,” which is the Fed’s target.
Inflation rose slightly in December as fight to tame prices continues
The Fed’s decision, announced at the end of its two-day policy meeting, keeps the central bank’s benchmark interest rate between 5.25 and 5.5 percent. So far, officials have signaled three rate cuts this year, each of a small quarter-point. But they haven’t dictated exactly when that process will begin.
