Powell: Economy Growing but Inflation Still 'Too High' to Adjust Benchmark Interest Rate
Powell: Economy Growing but Inflation Still 'Too High' to Adjust Benchmark Interest Rate
The Federal Reserve has decided to keep the federal funds rate unchanged for now, waiting for more confidence in inflation before considering any adjustments.
On Wednesday, March 20, 2024, the Federal Open Market Committee (FOMC) stated that there will be no changes to the federal funds rate at this time.
Fed Delays Interest Rate Changes, Awaits 'Greater Confidence' in Inflation
The US Federal Reserve has chosen to keep the federal funds rate at its current level of 5.25% to 5.5%. Initially, expectations pointed to a rate cut in March 2024, but this anticipation has now been deferred until the June 2024 FOMC meeting.
The committee emphasized its intention not to lower the benchmark interest rate until there is "greater confidence that inflation is moving sustainably" towards the 2% target.
The Fed's update on Wednesday indicated that "in considering any adjustment to the target range for the federal funds rate, the committee will carefully assess incoming data, the evolving outlook, and the balance of risks." Additionally, it underscores the importance for Fed officials to achieve "greater confidence" that emerging market inflation rates are heading towards their 2% target, whereas inflation has continued to rise over the previous two months.
"Inflation has declined substantially but is still too high," Powell told the press on Wednesday. He further noted that "the economy has made considerable progress." The Fed Chair added, "Ongoing progress is not assured, the path forward remains uncertain."
Likewise, bitcoin (BTC) and the broader crypto economy have shown minimal fluctuations following the Fed ruling. BTC saw a 1.6% gain, however, following Powell's press statement. Likewise, gold and silver prices remained stable.
What do you think about the Fed's decision to hold interest rates on Wednesday? Share your thoughts and opinions on this topic in the comments section below.