Fed leaves rates unchanged, but signals no rush to cut amid ‘elevated’ inflation By Investing.com

Investing.com — The Federal Reserve left interest rates unchanged Wednesday, though signaled no rush to cut rates as more confidence was needed that “elevated” inflation continues to slow toward target at a time of “solid” economic growth and strong job gains.

Fed sees rates higher for longer as inflation battle continues, but signals tightening bias in rearview mirror 

“The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent,” the Fed said in its monetary policy statement on Wednesday. 

While there isn’t a pressing need to rush to cut rates, the statement offered clues that the Fed has shifted to less hawkish stance as prior remarks that were present in Fed’s December statement referring to “additional policy firming,” were removed. 

Soft landing get boost as Fed sees more balanced risks to inflation, labor market goals  

The Federal Open Market Committee, or FOMC, left its in a range of 5.25% to 5.50%.

It was the fifth-straight meeting that the FOMC decided to keep monetary policy steady as recent economic data — showing slowing inflation, but a still strong labor market — has fueled expectations that the Fed could deliver a soft landing by reining in inflation to its 2% target without causing a major spike in unemployment.

The Fed appeared to be endorsing view, acknowledging in the statement that “risks to achieving its employment and inflation goals are moving into better balance.”

The latest reading on , the Fed’s preferred measure of inflation, fell below 3% on an annualized basis in December for the first time since April 2021. But while the Fed welcomed the ease in inflation over the past year, the pace remains “elevated.”

While the odds of a March cut to about 55% from a peak of 80% earlier this year, investors are still expecting the Fed to deliver between five and six rate cuts this year. That is well beyond the Fed’s December projections for three rate cuts this year.