Jerome Powell
The US Federal Reserve kept its key lending rate constant on Wednesday and forecast only one rate cut this year, down from the three projected in March after inflation halted in the first quarter.
The Fed voted unanimously to retain its benchmark interest rate between 5.25 and 5.50 percent, citing modest progress toward its long-term inflation target of 2 percent.
The announcement signals that central bank policymakers are leery of decreasing interest rates too soon, despite consumer inflation data published earlier Wednesday that showed a slowing in the rate of price increases in May.
The Labor Department said that the annual consumer price index (CPI) was 3.3 percent last month, down 0.1 percentage point from April, and steady on a monthly basis. This came in slightly lower than expectations.
The US Federal Reserve chair Jerome Powell applauded the inflation data during a press conference on Wednesday but warned that the US central bank needs to see more good inflation readings before it can contemplate decreasing interest rates.
“If the US economy remains strong and inflation persists, the Fed would be prepared to maintain the current target range for the federal funds rate as long as appropriate”, Powell continued.
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