The US Federal Reserve voted Wednesday to leave interest rates unchanged for a fourth straight meeting, but said the “risks to achieving its employment and inflation goals are moving into better balance.”
The Fed has a dual mandate to keep both inflation and the unemployment rate low, and has been heavily focused on bringing high inflation back down toward its long-term target of two percent.
The US central bank confirmed in a statement that it was holding its benchmark lending rate steady at a 23-year high between 5.25 percent and 5.50 percent.
The Fed added that its rate-setting committee is unlikely to start cutting interest rates “until it has gained greater confidence that inflation is moving sustainably toward 2 percent.”
The Fed’s favored inflation measure, which strips out volatile food and energy prices, has now fallen below an annual rate of 3.0 percent, while economic growth remained robust at 2.5 percent in 2023 and unemployment stayed close to historic lows.
“The data to date has been stunningly good,” KPMG chief economist Diane Swonk wrote in a blog post this week.
Fresh data published Wednesday from payroll firm ADP showed that private sector hiring has cooled more than expected this month, further underscoring the Fed’s progress.