The Federal Reserve held interest rates steady Wednesday after a year of remarkable progress in its fight against inflation.
The Federal Open Market Committee (FOMC) — the panel of Fed officials responsible for monetary policy — kept its baseline interest rate at a range of 5.25 to 5.5 percent following its final meeting of the year. The central bank raised rates to that level in July and has now kept them there after three consecutive meetings.
Financial and economic experts expected the Fed to maintain its baseline interest rate range as inflation continues to fall but remains above the bank’s target of 2 percent annual price growth.
Consumer prices were up 3.1 percent annually as of November, according to Labor Department data, well below the 9.1 percent annual inflation rate clocked in June of last year.
The economy has also fared far better than many forecasters expected and avoided a recession seen by many experts as inevitable. Just 3.7 percent of American workers were unemployed in November, according to Labor Department data, in line with pre-pandemic numbers.
With inflation still above target and the economy holding strong, the Fed is hoping to maintain progress by keeping rates at a 22-year high. Higher interest rates tend to slow the economy and reduce spending on goods and services that could drive up prices.
The Fed, however, is also facing calls to cut interest rates next year before the weight of high borrowing costs take a steeper toll on the economy.
Fed officials have said little about their plans for 2024, but leaders have been wary to declare victory against inflation.
Fed Chair Jerome Powell has warned that it is too soon to know if inflation is on track to return to pre-pandemic levels, and would not rule out future rate hikes. Powell is scheduled to hold a press conference at 2:30 p.m. ET.
