The Federal Reserve held interest rates steady Wednesday following its first monetary policy meeting of the year.
The Federal Open Market Committe (FOMC) kept its baseline interest rate range at 5.25 to 5.5 percent after several months of strong economic data and slowing inflation.
While the decision was widely expected, Fed watchers will be listening closely to Chair Jerome Powell’s press conference at 2:30 p.m. ET for any signs of how the central bank will move in the coming months.
Top Fed officials have signaled rate cuts are coming in 2024 as long as inflation continues to fall. Inflation clocked in at 3.4 percent in December, according to the latest consumer price index (CPI), down significantly from its 9 percent peak in June 2022.
GDP growth and the job market have remained strong despite widespread predictions of a recession a year ago, although a series of high-profile layoffs this month could throw a wrench in the Fed’s forecasted “soft landing.”
Private American companies added 107,000 new jobs in January, according to the latest report released by ADP, far below the 150,000 economists polled by the Wall Street Journal predicted. The Labor Department will release the January jobs report on Friday.
But consumers are also more optimistic about the state of the U.S. economy than they have been in the past two years, according to surveys by consulting and polling company Gallup and the business research nonprofit The Conference Board released this week.
That could b good news for President Biden, who has been trying to sell his economic platform to voters as his reelection campaign heats up. The Fed’s decision on how and when to cut interest rates is totally independent of politics, but the timing has nevertheless opened Powell and the central bank up to partisan pressure.
In a letter to Powell on Sunday, Sens. Elizabeth Warren (D-Mass.), John Hickenlooper (D-Colo.), Jacky Rosen (D-Nev.) and Sheldon Whitehouse (D-R.I.) urged the Fed to cut interest rates that they say have “aggravated the country’s persistent crisis of housing access and affordability.”
“As the Fed weighs its next steps in the new year, we urge you to consider the effects of your interest rate decisions on the housing market and to reverse the troubling rate hikes that have put affordable housing out of reach for too many,” the senators wrote.
