The United States Federal Reserve, the US’ central banking system, kept interest rates unchanged and at a 23-year high for the fifth consecutive time at the conclusion of its Federal Open Market Committee (FOMC) meeting on Wednesday.

 

Inflation slowed consistently throughout 2023, but stubborn price pressures persisted at the beginning of this year. This hotter-than-expected inflation has raised concerns among investors and dashed hopes for the first rate cut this year. Traders are now overwhelmingly forecasting that the first cut will come sometime during the upcoming summer.

 

Federal Reserve Chairman Jerome Powell stated before US Congress earlier this month that the reserve wants to see "more evidence" that inflation is on its way to the 2 percent target. He added that a rate cut for this year remains on the table and that the Fed is unlikely to raise interest rates again.

 

The Fed's decision to keep its key lending rate between 5.25 percent and 5.50 percent lets policymakers "carefully assess incoming data, the evolving outlook, and the balance of risks," it said in a statement.

 

It is expected that Chairman Powell will reiterate in his press conference after the meeting that officials are still in a wait-and-see mode. In addition to Powell's comments, investors will also closely watch the latest economic projections from the Federal Reserve, known as the dot plot, to see if officials now expect fewer rate cuts this year than they did in December.

 

“Inflation is still too high,” said Chairman Powell. "Ongoing progress in bringing it down is not assured, and the path forward is uncertain."