The Federal Reserve made a widely expected move and opted to keep its interest rates intact during a meeting on Wednesday. The Fed officials unanimously voted to keep the benchmark interest rate at its 23-year high in the range of 5.25%-5.50%.
Still, there are promising signs that a rate cut is coming sooner rather than later. In a statement shared with the media, the Fed said that the “risks to achieving its employment and inflation goals continue to move into better balance” while calling the inflation levels “somewhat elevated.”
“Inflation has eased over the past year but remains somewhat elevated. In recent months, there has been some further progress toward the Committee’s 2 percent inflation objective,” the statement said.
The wording of the statement indicates that the Fed is more comfortable with the inflation levels compared to its June meeting. Back then, inflation was simply characterized as “elevated,” with the officials saying there was “modest further progress” in reaching the inflation objective.
Speaking with the media after the meeting, Fed chairman Jerome Powell further fueled the optimism about rate cuts. Powell said that if the economic data continue to show cooling inflation, an interest rate cut will follow during the next meeting in September.
“If that test is met, a reduction in our policy rate could be on the table as soon as the next meeting in September,” Powell said.