Inflation “slightly increased”
US Federal Reserve shies away from interest rate cut
31.07.2024, 20:00
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The US Federal Reserve is leaving key interest rates unchanged. Financial markets expect central bankers to initiate a monetary policy turnaround and lower interest rates at their next meeting in September.
The US Federal Reserve is still keeping its feet still and at the same time signaling its willingness to change interest rates soon. The monetary authorities around Federal Reserve Chairman Jerome Powell left the key monetary policy rate in the range of 5.25 to 5.50 percent. At the same time, they opened the door for a rate cut.
The text accompanying the interest rate decision mentioned some further progress on the way to the inflation target of two percent. At the same time, the central bank sees inflation as only “slightly elevated.” The financial markets have been speculating for some time about an interest rate turnaround in September. Investors hoped to get information about the future course from Powell’s appearance before the press, which is scheduled for 8:30 p.m. (CEST).
The monetary authorities pay particular attention to the price development of a fixed basket of goods, which is based on the personal spending of US consumers. The so-called PCE index calculated from this rose by only 2.5 percent in June compared to the same month last year, after 2.6 percent in May. And consumer prices also did not rise as sharply in June, with an inflation rate of 3.0 percent, as in May (3.3 percent).
With inflation continuing to decline, experts believe the time for a turnaround may soon be here: “We expect a first interest rate cut in the September meeting,” said Commerzbank economist Bernd Weidensteiner.