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
-
What the Comcast Cable Spinoff Means for InvestorsComcast has announced plans to spin off select cable networks and digital assets into a separate publicly traded company. Here's what you need to know.
-
TJX Stock: Wall Street Stays Bullish After EarningsTJX stock is trading lower Wednesday despite the TJ Maxx owner's beat-and-raise quarter, but analysts aren't worried. Here's why.
-
What the Comcast Cable Spinoff Means for Investors
Comcast has announced plans to spin off select cable networks and digital assets into a separate publicly traded company. Here's what you need to know.
-
TJX Stock: Wall Street Stays Bullish After Earnings
TJX stock is trading lower Wednesday despite the TJ Maxx owner's beat-and-raise quarter, but analysts aren't worried. Here's why.
-
Target Is the Worst S&P 500 Stock After Earnings. Here's WhyTarget stock is down big after the retailer missed expectations for its third quarter and slashed its full-year outlook. Here's what Wall Street is saying.
-
For a More Secure Retirement, Build in Some 'Safe Money'To solidify your retirement plan, write it down, reduce your market risk and allocate more safe money into your plan for income.
-
Five Steps to a Mindfully Fearless CareerIf, like many women, you're struggling with imposter syndrome, try developing an athlete's winning mindset. It's as simple as facing one small fear every day.
-
Stock Market Today: Stocks Rally Despite Rising Geopolitical TensionThe main indexes were mixed on Tuesday but closed well off their lows after an early flight to safety.
-
What's at Stake for Alphabet as DOJ Eyes Google's ChromeAlphabet is higher Tuesday even as antitrust officials at the DOJ support forcing Google to sell its popular web browser. Here's what you need to know.
-
Lowe's Stock Is Falling After Earnings. Here's WhyLowe's stock is lower Tuesday as Wall Street weighs a beat-and-raise quarter against declining revenue. This is what you need to know.
