Fed Keeps Rates Unchanged, Flags 'Lack of Further Progress' On Inflation

• The U.S. Federal Reserve held interest rates steady on Wednesday and signalled it is still leaning towards eventual reductions in borrowing costs, but put a red flag on recent disappointing inflation readings and suggested a possible stall in the movement towards more balance in the economy.
• Fed Chair Jerome Powell said it was likely to take longer than previously expected for U.S. central bank officials to gain the "greater confidence" needed to kick off interest rate cuts.
• Nevertheless, Powell said he still expects inflation to ease over this year. "That's my forecast," he said. "I think my confidence in that is lower than it was because of the data that we've seen."
• The Fed's latest policy statement kept key elements of its economic assessment and policy guidance intact, noting that "inflation has eased" over the past year, and framing its discussion of interest rates around the conditions under which borrowing costs can be lowered.
• "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 towards 2%," the Fed repeated in a unanimously-approved statement that still indicated the next move on rates will be down. This continues to leave the timing of any rate cut in doubt, and Fed officials made emphatic their concern that the first months of 2024 have done little to build the confidence they seek in falling inflation.

(Source: Reuters)