U.S. Federal Reserve Board Chairman Jerome Powell speaks at a news conference at the headquarters of the Federal Reserve on December 13, 2023 in Washington, DC. The Federal Reserve announced today that interest rates will remain unchanged.
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U.S. Federal Reserve Board Chairman Jerome Powell speaks at a news conference at the headquarters of the Federal Reserve on December 13, 2023 in Washington, DC. The Federal Reserve announced today that interest rates will remain unchanged.
Win McNamee/Getty Images
The Federal Reserve held interest rates steady on Wednesday, but policymakers signaled they still expect to start cutting rates later this year.
Updated forecasts from members of the Fed’s rate-setting committee show an average of three quarter-point rate cuts in 2024 — similar to what policymakers were projecting in December.
While inflation has cooled significantly over the last year, recent measures show prices are still climbing faster than the central bank would like. Since last summer, the Fed has kept interest rates at their highest level in more than two decades, in an effort to tamp down demand and bring prices under control.
Committee members voted unanimously Wednesday to keep their benchmark rate between 5.25 and 5.5%. “The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent,” the Fed said in a statement.
So far, the economy has weathered high interest rates in relatively good shape. The unemployment rate has remained below 4% for more than two years. Employers have added an average of 265,000 jobs in each of the last three months.
Higher interest rates have taken a toll on the housing market, however. Sales of existing homes fell 19% last year, dropping to their lowest level since 1995. The average interest rate on a 30-year mortgage was 6.74% last week, according to Freddie Mac — down from a peak near 8% last October.
Retail sales have also slowed in recent months in a sign that some consumers are struggling with the combination of high prices and high borrowing costs. Credit card debt topped $1.1 trillion last year, according to the Federal Reserve Bank of New York, and the number of card users who are behind on their payments now exceeds pre-pandemic levels.
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