Fed holds rates steady, nods to possible September cut

[libertybele]

Fed holds rates steady, nods to possible September cut

    Policy rate held steady in 5.25%-5.50% range
    September rate cut in the cards
    Fed describes inflation as 'somewhat' elevated

WASHINGTON, July 31 (Reuters) - The Federal Reserve held interest rates steady on Wednesday but opened the door to reducing borrowing costs as soon as its next meeting in September as inflation continues coming into line with the U.S. central bank's 2% target.
"There has been some further progress towards the Committee's 2% objective," the central bank's Federal Open Market Committee said in a statement at the end of a two-day policy meeting in which it kept its benchmark overnight interest rate in the 5.25%-5.50% range, but also set the stage for a rate cut at its Sept. 17-18 meeting, just seven weeks shy of the Nov. 5 U.S. elections.
While Fed officials are wary of any actions that could mar their data-not-politics approach to setting monetary policy, the steady drop in inflation in recent months prompted a broad consensus that the inflation battle was near its end.
Inflation, the Fed said, was now just "somewhat elevated," a key downgrade from the assessment that it has used throughout much of its battle against rising prices that inflation was "elevated."
The central bank uses the personal consumption expenditures price index for its 2% annual inflation target. The PCE price index rose 2.5% in June after exceeding 7% in 2022.
In addition, the Fed removed standing language that it was "highly attentive to inflation risks," and replaced it with an acknowledgement that policymakers were now "attentive to the risks to both sides of its dual mandate," which includes a charge from Congress to maintain maximum employment consistent with stable prices.
U.S. central bankers have said it would be appropriate to reduce borrowing costs before inflation actually returns to their target to account for the time it takes monetary policy to affect the economy.
So far the economy "has continued to expand at a solid pace," the Fed said in its latest policy statement, and while "job gains have moderated," the unemployment rate "remains low."
But the jobless rate has been rising, and policymakers have put more focus of late on avoiding the sort of sharp rise in unemployment often associated with high interest rates and slowing inflation.
The Fed did not commit in its statement to a rate cut in September, and repeated that policymakers still need "greater confidence that inflation is moving sustainably towards 2%" before lowering borrowing costs...............

https://www.reuters.com/markets/us/fed-expected-hold-rates-steady-open-door-september-cut-2024-07-31/

[mystery-ak]

Fed Holds Rates Steady But Sends Mixed Signals About Timing of A Cut Later This Year

John Carney 31 Jul 2024

Federal Reserve officials agreed to hold interest rates steady at a 22-year high and signaled they may cut rates this year if inflation continues to show signs of declining to their two percent target.

Officials held the central bank’s benchmark federal funds rate unchanged Wednesday at a range between 5.25 percent and 5.5 percent, the level it reached last July after 10 consecutive hikes, following a run of mixed economic data that revealed moderating price pressures and a cooling of the labor market even while the economy continues to grow quickly.

The Fed’s statement indicates that it remains patient on rate cuts and is still looking for more data to build confidence that inflation is moving toward its target. This may throw some cold water on investors’ expectations of a September cut.

“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 released at the end of its two-day meeting.

In a press conference following the meeting, Powell said the Fed might cut at the September meeting if “more good data” on inflation is forthcoming.

The Fed’s next scheduled meeting is in September. After that, there are two more cuts on the calendar this year, in November and December. Prior to the meeting, financial markets had been indicating a 100 percent chance that the Fed would cut in September and very high odds that the Fed would cut one or two more times this year.

more
https://www.breitbart.com/economy/2024/07/31/fed-holds-rates-steady/

[Wingnut]

Inflation is not going to "cool"  The Fed is a failure.  I'm no economist but I know failed policy when I feel it in my wallet.

[Hoodat]

If the Fed was truly interested in curbing inflation, then they would stop printing new money to fund government spending, and they would then leave it totally up to banks to set their own interest rates.

[libertybele]

Normally our financial advisor who we've had for years is pretty much optimistic on the state of the economy.  We got talking about the likelihood of a 30-40% market crash/correction and he remarked he's not so worried about that as he is the rapidly rising deficit.

[LMAO]

Normally our financial advisor who we've had for years is pretty much optimistic on the state of the economy.  We got talking about the likelihood of a 30-40% market crash/correction and he remarked he's not so worried about that as he is the rapidly rising deficit.

He’s right

The stock market has a history of going up and down and crashes and corrections and Bulls and Bears

The biggest threat facing this country is the rising deficits, the debt, and the expansion of the money supply to fund them


None of this is irreparable. It’s gonna take some tough choices and people with the testicles to make them in leadership. Promising all kinds of new spending  may get you elected. But it doesn’t repair our fiscal situation