As the economic reality of 2024 continues to debunk the overly rosy projections issued late in 2023, the Federal Reserve announced on Wednesday that interest rates would again remain unchanged as it acknowledged that inflation "remains elevated."
The Fed's 12-member Federal Open Market Committee (FOMC) decided to maintain a pause on interest rates at 5.25 percent to 5.5 percent just a few days after inflation reports for February showed prices continuing to increase — even accelerating — above the Federal Reserve's target of just 2.0 percent inflation.
Interest rates, despite being held steady for multiple consecutive meetings of the Fed, are still at their highest level since early 2001. Notably, Wednesday's decision is another pushing-off of what the Fed anticipated would be several interest rate cuts in 2024 — the prospect of which has become less likely with each monthly inflation report showing prices continuing to increase.
More from the FOMC's release on Wednesday's decision to maintain the status quo that continues to punish Americans and small businesses:
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. In considering any adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. 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. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in its previously announced plans. The Committee is strongly committed to returning inflation to its 2 percent objective.
Despite President Joe Biden's claims — including in his State of the Union address earlier this month — that inflation "keeps coming down," that's just not happening in the real world.
The Consumer Price Index showed costs for Americans rising 0.4 percent in February after advancing 0.3 percent in January for an annual increase of 3.2 percent — above the Fed's goal of 2.0 percent. Upstream from consumers, the Producer Price Index came in smoking hot in February too, doubling Wall Street expectations with a 0.6 percent increase, for an annual advance of 1.6 percent — the largest annual increase since the period between September 2022 and September 2023.
This is a developing story and may be updated.