In their meeting on Wednesday, Federal Reserve officials chose to keep interest rates at their current 23-year high, citing the relatively strong economy and “a lack of further progress” on getting inflation under control.
Jerome Powell, Federal Reserve chair, said recently that interest rates will likely be lowered this year, but that’s subject to change based on evolving data. Consumer prices stayed high during 2024’s first-quarter, thanks to gas, housing and the broader services sector, and the latest Employment Cost Index released Tuesday showed wage growth—none of which are positive indicators for rate cuts in the next few months.
Along with its key interest rate, the Federal Reserve also uses its balance sheet to stimulate or slow the economy, the latter of which it’s been doing recently. However, in June, it will allow up to $25 billion—down from $60 billion—in Treasuries from its portfolio to mature monthly without replacing them.
