WASHINGTON (AP) — The Federal Reserve is set to leave its key interest rate unchanged Wednesday as it seeks to guide the U.S. economy toward a “soft landing»
The Federal Reserve is set to leave its key interest rate unchanged Wednesday as it seeks to guide the U.S. economy toward a “soft landing” of cooling inflation without triggering a deep recession.
Chair Jerome Powell and other Fed officials have made clear that they’re now inclined to move more gradually and cautiously toward their goal of 2% annual inflation. Their more deliberative approach follows the 11 rate hikes they unleashed beginning in March 2022, which substantially raised borrowing costs for consumers and businesses.
Yet with inflation pressures still underlying the economy, Powell won’t be declaring victory on Wednesday, when the Fed’s latest policy meeting ends. The attention of investors and economists will instead focus on what signals the Fed may send about its likely next actions.
The clearest signal will likely come from the Fed’s 19-member interest-rate committee in the batch of economic forecasts its members issue each quarter. The updated projections are likely to show that the policymakers expect to raise their benchmark rate once more this year. That rate now stands at roughly 5.4%, its highest point in 22 years.
And those projections will likely also show that the Fed envisions fewer interest rate cuts next year than it did in June, when it projected three rate reductions in 2024. Even as the central bank is winding down its rate hikes, Powell and other Fed officials have said their key rate could remain at its peak well into next year.
