WASHINGTON — The US Federal Reserve on Wednesday left interest rates unchanged at a 22-year high of 5.25 percent to 5.5 percent as the latest consumer price data shows that inflation seems to be cooling.
In a statement after the two-day policy meeting, the Federal Open Market Committee (FOMC), the Fed’s policy-setting body, reiterated that the committee does not expect it will be appropriate to reduce the target range “until it has gained greater confidence that inflation is moving sustainably toward 2 percent.”
In addition, the committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, the FOMC said.
The Fed’s announcement came just a few hours after the US Labor Department reported that the Consumer Price Index (CPI) in May increased 3.3 percent from a year ago, after climbing 3.4 percent in April and 3.5 percent in March.
The core CPI has risen 3.4 percent over the past year, the smallest 12-month change since April 2021, Sarah House and Michael Pugliese, economists at Wells Fargo Securities, noted in an analysis.
“That said, inflation remains above the Fed’s target, and there have been enough false starts in the past that the FOMC likely will need to see at least a couple more rosy inflation reports to gain the ‘greater confidence’ needed to start reducing the federal funds rate,” the economists said.
