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
-
Focus on These Five Critical Areas in Retirement PlanningWorried about how you'll pay for your retirement? It can help to structure your finances around five key areas: taxes, income, medical, legacy and investments.
-
Is Downsizing Right for Your Retirement?The lower costs of a smaller home in retirement might sound appealing, but be ready for the trade-offs that come with making this big decision.
-
Focus on These Five Critical Areas in Retirement Planning
Worried about how you'll pay for your retirement? It can help to structure your finances around five key areas: taxes, income, medical, legacy and investments.
-
Is Downsizing Right for Your Retirement?
The lower costs of a smaller home in retirement might sound appealing, but be ready for the trade-offs that come with making this big decision.
-
Three Tips for Managing Your Election-Related StressAs Election Day approaches fast, consider taking some steps to keep your anxiety and expectations under control.
-
Market Dips Can Be Retirement Busters: Ways to Guard YourselfIt's harder for retirees to bounce back from stock downturns, so you need an income strategy (and a portfolio) that's resilient.Chris
-
Stock Market Today: Nasdaq Gains Ahead of Mega-Cap EarningsThe S&P 500 and the Dow Jones Industrial Average slipped as McDonald's continued to slide.
-
The Best Tech Stocks to BuyTech stocks are the market's engine of growth. But what defines a tech stock? And how do you find the best ones to buy? We take a look here.
-
Apple Stock Gets Downgraded to Sell Ahead of Earnings: Should Investors Be Worried?KeyBanc cut Apple stock's rating to the equivalent of a Sell this morning on concerns over iPhone 16 sales. Here's what that means.
-
Capri Stock Craters After Judge Blocks Tapestry Merger: What to KnowCapri Holdings stock has been nearly cut in half Friday after a U.S. judge blocked the retailer's proposed merger with Kate Spade parent Tapestry.
