The Federal Reserve emphasized that inflation has remained stubbornly high and said it doesn’t plan to cut interest rates until it has “greater confidence” that price increases are slowing sustainably to its 2% target. The Fed kept its key rate at a two-decade high of roughly 5.3%. Several hotter-than-expected reports have recently undercut the Fed’s belief that inflation was steadily easing. The combination of high rates and persistent inflation has also emerged as a potential threat to President Joe Biden’s re-election bid. “In recent months,” Chair Jerome Powell said, “inflation has shown a lack of further progress toward our 2% objective," adding, "It is likely that gaining greater confidence will take longer than previously expected.”
