Fed Holds Rates Steady As Americans Continue To Be Crushed By High Interest Rates

The Federal Reserve announced on Wednesday that it would not change its benchmark federal funds rate despite recent changes in inflation and slow economic growth.

The Fed’s decision not to change interest rates keeps the target range between 5.25% and 5.50%, the highest level since 2001, marking the seventh meeting in a row where the Fed chose not to adjust the rate, according to an announcement from the Fed following a meeting by the Federal Open Market Committee (FOMC). The federal funds rate has been set to its current level in an attempt to tame inflation, with the Fed’s preferred measure of inflation, the personal consumption expenditure index, rising 2.7% for the year and 0.3% in the month in April.

“The Committee judges that the risks to achieving its employment and inflation goals have moved toward better balance over the past year,” the Fed said in the announcement. “The economic outlook is uncertain, and the Committee remains highly attentive to inflation risks. In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent.”

The Fed updated its future projection, with an average of board members now estimating that the rate will end the year at around 5.1%, equivalent to around one rate cut, according to the FOMC. The new projection differs from March’s projection of around three cuts.

The more broadly watched measure of inflation, the consumer price index, was released to the public for May just hours ahead of the Fed’s decision, remaining flat for the month and rising 3.3% on an annual basis, far higher than the Fed’s 2% target. The CPI has so far failed to drop below 3% since peaking at 9% in June 2022.