Key takeaways from the Fed’s rate decision and Powell’s press conference

The Federal Reserve held its key interest rate steady Wednesday for the fifth consecutive meeting, as the central bank awaits more data to determine when to cut rates.

The Federal Reserve held its key interest rate steady Wednesday for the fifth consecutive meeting, as the central bank awaits more data to determine when to cut rates. The Fed has raised rates aggressively over the past two years in a bid to fight the highest inflation in decades. But while Americans continue to deal with high interest rates and inflation, Fed Chair Jerome Powell said the central bank is still not ready to lower borrowing costs just yet. Wall Street is betting that the first rate cut will come in the summer. Fed officials are facing the difficult task of balancing the risk of cutting too soon with the risk of cutting too late — both of which come with consequences. That’s why the timing of that first rate cut is so critical, because it could either undo the progress the Fed has seen, if officials cut too soon, or it could fail to prevent the economy from sharply deteriorating, if officials cut too late. Fed officials also released a fresh set of economic projections Wednesday. They show that central bank officials now expect fewer rate cuts in the coming years than they estimated in December. A majority of Fed policymakers continue to expect three rate cuts this year, but they now see fewer in 2025 and 2026. They expect interest rates in the longer run to be slightly higher than they projected in December. Economic growth is also expected to be much higher this year than officials estimated.