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2mo ago

Federal Reserve Holds Interest Rates Steady Amid Persisting Inflation Concerns

Fed officials emphasize the need for clearer signs of progress toward the 2% inflation target before considering further rate cuts.

U.S. Federal Reserve Governor Michelle Bowman gives her first public remarks as a Fed policymaker at an American Bankers Association conference in San Diego, California, U.S., February 11 2019. REUTERS/Ann Saphir/File Photo
Federal Reserve Bank of San Francisco President Mary Daly poses for a photograph at the Kansas City Federal Reserve Bank's annual Economic Policy Symposium in Jackson Hole, Wyoming, U.S. August 25, 2023. REUTERS/Ann Saphir/File Photo
Federal Reserve Bank of Philadelphia President Patrick Harker stands behind the Jackson Lake Lodge in Jackson Hole, where the Kansas City Fed holds its annual economic symposium, in Wyoming, U.S. August 24, 2023. REUTERS/Ann Saphir
Federal Reserve Governor Christopher Waller speaks during The Clearing House Annual Conference in New York City, U.S. November 12, 2024. REUTERS/Brendan McDermid

Overview

  • Federal Reserve leaders, including Daly, Waller, Bowman, and Harker, agree that the current interest rate range of 4.25% to 4.5% is appropriate given inflation's slow decline.
  • January inflation data showed mixed results, with consumer price index (CPI) inflation rising unexpectedly but personal consumption expenditures (PCE) inflation suggesting milder increases.
  • Fed officials expressed concern about potential seasonal distortions in inflation data, complicating assessments of underlying trends.
  • The strong labor market, with steady wage growth and low unemployment, is seen as a factor supporting the current monetary policy stance.
  • Uncertainty over the economic impact of new tariffs and trade policies under President Trump's administration is being monitored but is not expected to paralyze decision-making.