Federal Reserve Keeps Interest Rates Steady

May 2, 2024

Inflation is still too high. Further progress in bringing it down is not assured and the path forward is uncertain.

Federal Reserve Chair Jerome Powell. Wrapping up a two-day meeting, the United States’ central bank announced it will hold its key interest rate at its current level; this rate, the federal funds rate, helps set other borrowing rates, such as interest rates for credit cards and car loans.

Why It Matters: Interest rates are at a 23-year high as the Fed works to fight elevated inflation. The Fed originally planned for three rate cuts in 2024, but this now looks less likely as the Fed said it does not expect to reduce its key rate “until it has gained greater confidence that inflation is moving sustainably toward 2 percent.” The bank maintained its federal funds rate between 5.25%-5.50%, where it has been since July 2023. However, the Fed described economic activity as expanding at a “solid pace,” as job gains remain “strong, and the unemployment rate … low.” The Fed’s next meeting is in June.

This news follows recently released data on the U.S. economy reflecting “slower than expected growth, higher than expected inflation.” Looking Head: The U.S. will release its April jobs report on Friday, providing another snapshot of the economy.

Read More: Fed keeps rates steady as it notes ‘lack of further progress’ on inflation (CNBC)

by Emily Hooker, based in Texas