Fed keeps rates at 4.25%-4.50% as Powell says cuts await clearer inflation progress

The Federal Reserve left its benchmark interest rate unchanged at 4.25% to 4.50% after its latest policy meeting, signaling that borrowing costs are likely to stay elevated until inflation shows more sustained progress toward the central bank’s 2% target.

In its statement, the Fed pointed to persistent price pressures and said it needs greater confidence that inflation is moving lower before considering any rate cuts. Chair Jerome Powell reinforced that message, saying reductions are not imminent without clearer evidence of disinflation.

The decision came as markets continued to reassess the outlook for monetary policy in 2024. U.S. stocks reacted negatively after the announcement, with the S&P 500 falling 0.5% in after-hours trading. Treasury yields moved higher as investors scaled back expectations for near-term easing.

The dollar also strengthened on the news, with the dollar index rising 0.3% to 106.8, reflecting renewed demand for the currency as interest rates remain relatively high. The Fed’s cautious stance suggests policymakers remain focused on ensuring inflation is firmly under control before shifting toward a more accommodative policy path.