As expected, The Fed held interest rates steady for the sixth straight time. Inflation may be better than it was a couple of years ago when it was sky high, but it has not cooled off enough for any kind of a rate cut.
"We need to be more confident" said Fed Chair Jerome Powell, "We've said we didn't see progress in the first quarter. I don't know how long it will take, I can just say that when we get that confidence, then rate cuts will be in scope."
Translation, don't expect a rate cut anytime soon. The widely expected decision – which left interest rates unchanged at a range of 5.25% to 5.5%, the highest level in 23 years – comes amid signs that progress on inflation is stalling, or even starting to reverse.
"Those long awaited interest rate cuts, they're in an indefinite holding pattern" said Bankrate Chief Financial Analyst, Greg McBride, "Until we start to see a better run of inflation numbers, the Fed's not getting any closer to cutting rates."
Investors are now hoping to see at least one, or maybe two rate cuts sometime this fall.
In their post-meeting statement, policymakers left the door open to rate cuts but stressed they need "greater confidence" inflation is coming down before easing policy.
"In recent months, there has been a lack of further progress toward the committee’s 2 percent inflation objective," the statement added.
"It's certainly possible we could see The Fed start to cut interest rates later this year" McBride told KTRH, "But for that to happen, we have to go on a winning streak with regard to inflation numbers. That's what we need in order to begin cutting interest rates."
The benchmark lending rate has been at a 23-year high, since July.
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