The U.S. Federal Reserve has kept interest rates at current levels and signaled that there is likely to be only one cut this year.
Previously, the central bank had been planning for three interest rate reductions in 2024.
However, the latest data showed inflation in America running at a 3.3% annualized rate, which is higher than the Fed’s 2% target.
“Inflation has eased over the past year but remains elevated,” said the central bank in a written statement. “In recent months, there has been modest further progress toward the Committee’s two per cent inflation objective.”
The Federal Reserve elected to keep its influential Fed Funds rate at its current range of 5.25% to 5.50%, the highest level in 23 years.
The Fed raised interest rates 11 times between March 2022 and July 2023 and has held rates steady at current levels for nearly a year now.
However, traders and investors seemed encouraged by the fact that the Fed is planning for more aggressive interest rate cuts in 2025, with four reductions totaling a full percentage point.
The benchmark S&P 500 index closed at a record high and above 5,400 for the first time following the Fed’s interest rate decision and comments.
The Federal Reserve’s next decision on interest rates is scheduled for July 30.
