Federal Reserve Holds Key Interest Rate Steady

February 1, 2024

Cuts are coming. It’s a question of when, and not if.

Gennadiy Goldberg, head of U.S. rates strategy at T.D. Securities, commenting on the Federal Reserve’s decision to hold its key interest rate steady. This marks the fourth consecutive decision to hold rates steady.

Why It Matters: The nation’s central bank decided leave the federal funds rate (which helps set other borrowing rates, such as interest rates for credit cards, car loans and mortgage rates) between 5.25%-5.5%, the highest it has been in more than 20 years. Leaving this rate at a higher level keeps borrowing money more expensive for consumers as the Federal Reserve works to combat elevated inflation by decreasing demand.

Worth Noting: While the Fed indicated it does not intend to raise interest rates, the question of when rate cuts will begin remains. Fed Chairman Jerome Powell said, “Based on the meeting today, I would tell you that I don’t think it’s likely that the committee will reach a level of confidence by the time of the March meeting to identify March as the time to do that [cut rates]. But that’s to be seen.

Read More: Fed Chief Jerome Powell says a March rate cut is not likely (CNBC)

by Emily Hooker, based in Texas