Fed Maintains Interest Rate Amid Lackluster Inflation Progress

Inflation’s strong hold has prompted decisions by the Federal Open Market Committee (FOMC) to maintain the benchmark interest rate at a range of 5-1/4 to 5-1/2 percent for the sixth consecutive time as hopes of a rate reduction begin to fade, the Fed noting that it “will likely take ‘longer than expected’ to gain the level of confidence on inflation’s trajectory needed to lower interest rates.” The FOMC will continue to reduce its holdings of Treasury securities, agency debt, and agency mortgage-backed securities beginning in June, but the pace of decline will be slowed by reducing the monthly redemption cap on Treasury securities from $60 billion to $25 billion, while maintaining the $35 billion monthly redemption cap on the other two holdings. Although inflation cooled rapidly in the final months of 2023, there has been a lack of further progress in 2024 towards achieving the Fed’s 2% inflation goal. “Meantime, the economy continues to expand on the back of a strong labor market and steady consumption and investment.”

Source:    https://www.crainsnewyork.com/economy/fed-cites-lack-progress-inflation-holds-rates-steady

Source:    https://www.federalreserve.gov/newsevents/pressreleases/monetary20240501a.htm