U.S. central bank holds rates steady, signals cuts aren't imminent
BNN Bloomberg
The U.S. Federal Reserve indicated Wednesday that it’s nearing a long-awaited shift toward cutting interest rates, a sign that its officials have grown confident that they're close to fully taming inflation. But the Fed also signaled that the first rate cut is likely months away.
The central bank kept its key rate unchanged at about 5.4 per cent, a 22-year high. In a statement, it marked a policy shift by dropping previous wording that had said it was still considering further rate hikes.
Still, the Fed cautioned that it “does not expect it will be appropriate” to cut rates “until it has gained greater confidence that inflation is moving sustainably” to its two per cent target. That suggests that a rate reduction is unlikely at its next meeting in March.
The overall changes to the statement — compared with its last meeting in December — show that the Fed has moved toward considering rate reductions while still maintaining flexibility. In December, the officials had signaled that they expected to carry out three quarter-point rate cuts in 2024. Yet they have said little about when those cuts might begin. Senior officials have stressed that the Fed will proceed cautiously.
