The Federal Reserve kept its benchmark interest rate at the current 5.25% to 5.5% target range, as policymakers acknowledged that inflation has eased over the past year but remains elevated.
As was widely predicted on and off Wall Street, the Fed continued its long-term messaging saying that it is committed to dropping inflation to its 2% target range as the economic outlook remains uncertain.
“Recent indicators suggest that economic activity has been expanding at a solid pace. Job gains have remained strong, and the unemployment rate has remained low,” said the central bank's rate-setting group — the Federal Open Market Committee (FOMC) — in its statement marking the conclusion of its two-day policy meeting today (March 20). “The committee judges that the risks to achieving its employment and inflation goals are moving into better balance,” the FOMC said.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
“It’s good to see the Fed understands it can cut rates while still being tough on inflation, given that the real fed funds rate will still be considered very restrictive," said Bryce Doty, senior PM/VP at Sit Investment Associates.
The FOMC also said it would continue to reduce its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in its previously announced plans. The committee also forecast three potential quarter-point rate cuts by the end of this year, reiterating its outlook from December.
The news comes on the heels of last week’s fourth-quarter gross domestic product (GDP) report, which showed a 3.2% growth rate. The rate is expected to slow to an average of 2% this year, which is in line with the economy’s potential growth rate, according to Kiplinger’s GDP Outlook report.
In remarks last week at a Kentucky production facility, Treasury Secretary Janet Yellen said that the nation’s economic recovery has been “the fairest" recovery on record. She said that GDP growth is strong and that inflation is down significantly, ”though we continue to take action to bring prices down, including health care costs.”
Federal Reserve Chairman Jerome Powell is set to provide more details on the FOMC decision at his subsequent press conference.
RELATED CONTENT
-
Need More Money for Retirement? You May Have Already Saved It.Over 29 million lost 401(k) accounts worth almost $1.65 trillion have been forgotten by their owners. Here are eight ways you can locate your account.
-
Five Ways to Save for Retirement in 2025If you did a poor job saving for retirement last year, don't despair. There are ways to build your nest egg in the new year.
-
The Wrong Money Question to Ask After Trump's ElectionIf you're wondering what moves to make with a new president moving into the White House, you're being dangerously shortsighted. Here's what to do instead.
-
An Investing Plan for This Year: Doing Less Can Lead to MoreAchieve more when investing in 2025 by planning to work smarter, not harder. These three strategies can help put you on the right track and keep you there.
-
All About Six Types of Auto Insurance CoverageDo you know what your auto insurance policy covers? Here's a primer on some coverage categories, along with examples of how each type of coverage works.
-
The Cheapest Places To Retire in the USWhen you're trying to balance a fixed income with an enjoyable retirement, cost of living is a crucial factor to consider.
-
The Best Bank ETFs to BuyThe best bank ETFs can offer above-average yields and reduce the complexities of investing in financial stocks.
-
Social Security and Medicare Funding: Is the Sky Falling?Social Security and Medicare are slowly running out of money, but what does that mean for the retirees counting on them? Actually, it's not all bad news.
-
What We Need to Do to Protect Retirees' Financial SecurityCognitive decline and aging in general put older retirees at risk of losing their financial security when they're the most vulnerable. What can be done?
-
Stock Market Today: Stocks End Mixed After FOMC MinutesThe minutes from the December Fed meeting signaled central bankers' uncertainty over potential Trump administration policies.
