The market already priced in a 100% probability of a rate cut by the Fed’s next meeting in September.
Topline
The Federal Reserve announced Wednesday it will keep interest rates the same, as expected, but gave slight indications economic data should soon support a rate cut, a welcome sign for borrowers and investors rooting for rates to come down from their 23-year high. Key Facts
The Fed’s policy-determining Open Markets Committee (FOMC) announced it unanimously voted to keep the target federal funds rate at the 5.25% to 5.5% range they’ve sat since last July, following the committee’s two-day meeting.
The FOMC said in a press release there’s been “some further progress” in the battle against inflation and that it’s “attentive to the risks” of an economic slowdown, both of which should support cuts in the near future, as the Fed tends to lower rates when inflation subsides or when the labor market needs a jolt.
It’d be the first rate cut since March 2020, when the Fed slashed rates to near zero, before undertaking the severe tightening cycle as inflation raged to its steepest level since the early 1980s.
“A rate cut could be on the table at the September meeting,” the always coy Fed Chairman Jerome Powell said at a press conference, offering the clearest bread crumb yet that rates may soon come down should economic conditions continue in the same trajectory.
