The US Federal Reserve maintained its key interest rate unchanged between 5.25%-5.50% and signaled only one expected rate cut before the end of the year, down from the three indicated in March, CNBC reports.
New forecasts suggest inflation is on track to meet the Fed’s 2% goal, allowing for policy easing later. Despite slight optimism, core inflation remains a concern, with the long-run interest rate now projected higher at 2.8% from 2.6%. Four Fed officials now favor no rate cuts this year, up from two. The committee anticipates more aggressive rate cuts in 2025, with four reductions totaling a full percentage point.
The economic outlook has been mixed, with GDP growth at 1.3% in the first quarter but a promising 3.1% for the second quarter. Persistent inflation challenges have thwarted initial expectations for rapid rate cuts, with the Fed maintaining a cautious approach to ensure inflation is convincingly reduced without harming employment.
