FED MEETING – Feds Hold Rates Steady but Could Fall in The Coming Months

The Federal Reserve held interest rates steady on Wednesday but signaled that rates could fall in the coming months if inflation continues to cool.

He cautioned, however, that the economy remains unpredictable and said the central bank would proceed cautiously. ”The economic outlook is uncertain and we remain highly attentive to inflation risks,” Powell said.

The Fed has been pleasantly surprised by the rapid drop in inflation in recent months. Core prices in December — which exclude food and energy prices — were up just 2.9% from a year ago, according to the Fed’s preferred inflation yardstick. That’s a smaller increase than the 3.2% core inflation rate that Fed officials had projected in December.

If that positive trend continues, the Fed may be able to start cutting interest rates as early as this spring. However, he sounded doubtful about a rate cut at the Fed’s next meeting in March as many investors in Wall Street had hoped for. The comments disappointed investors, with the Dow Jones Industrial Average tumbling 317 points.

Investors are still hopeful about a rate cut in May, with markets putting the likelihood of that at better than 90%.

NPR report

Gena Glaze