FOMC Meeting Highlights: Powell Maintains Interest Rates For Second Time, Core Inflation Rate Up At 2.7%
The US Federal Reserve on Wednesday kept its key interest rate unchanged for the second time, in line with expectations. In addition, core inflation rate is expected to be at 2.7% by end of 2026, up from 2.5% forecast in December.
At its last meeting, the Federal Reserve kept its policy interest rate steady in the 3.50%–3.75% range. Before that, it had delivered three consecutive rate cuts of 0.25% each to prevent a softening labour market from slipping into higher unemployment.
Here are the key highlights from the FOMC meet and Federal Reserve Chair Powell speech and press conference:
Near-Unanimous Decision
Jerome Powell and ten other members voted for maintaining the interest rate, while voting against the action was Stephen I. Miran, who preferred to lower the target range for the federal funds rate by 1/4 percentage point.
Inflation Outlook Revision
The Federal Reserve officials revised the core inflation outlook upward to 2.7%, compared to 2.5% forecast in December. Even though inflation has made further progress toward the Committee’s 2% objective but remains ‘somewhat elevated,’ the Federal Reserve said in a statement.
Powell, in his speech, said, “Near term inflation expectation are up in the recent weeks.”
He further added that energy prices will push up overall inflation and some of the oil shock will show up in core inflation. The series of shock due to the Middle east war have interrupted inflation progress, he pointed.
“Main thing we are looking for is lowering goods inflation,” he added.
He further added that “If we don’t see inflation progress, won’t see rate cut.”
This is a developing story.
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