Fed Rate Announcement: Rates Remained Unchanged
The Federal Reserve announced that rates will remain at the 20 year high, but hinted towards cuts in September.
Federal Reserve officials were widely expected to leave their key interest rate unchanged at 5.3 percent for a 12th straight month on Wednesday to slow economic growth and curb inflation, a decision that holds significant implications for President Biden, who, despite not seeking re-election, has aides hoping for months that a rate cut before the election would signal to voters that inflation is under control and borrowing costs for houses, cars, and more are set to decrease.
Stocks rose as Wall Street awaited the Fed’s decision. The S&P 500 was up 1.6 percent while the Nasdaq gained 2.5 percent, led by chipmaker Advanced Micro Devices after a strong earnings report on Tuesday.
The Federal Reserve left interest rates unchanged at 5.3 percent in their July decision, while keeping the door open to a coming rate cut in September. The Fed’s statement called inflation only “somewhat elevated,”
In their statement, the Committee stated that recent indicators suggest economic activity has continued to expand at a solid pace, with job gains moderating and the unemployment rate slightly increasing but remaining low. Inflation has eased over the past year but is still somewhat elevated. In recent months, there has been progress toward the Committee’s 2 percent inflation objective.
