Fed keeps rates steady, still sees three rate cuts this year

Investing.com -- The Federal Reserve kept rates steady on Wednesday, and maintained forecasts for three rate-cuts this year, pointing to the central bank’s confidence that the recent strength in inflation was an aberration from the deflationary trend.

The Federal Open Market Committee, the FOMC, kept its benchmark ratein a range of 5.25% to 5.5%.

The decision to keep rates steady for the fifth meeting in a row was widely expected as the Fed chair Jerome Powell previously hinted that March was too soon for the members to have enough confidence from incoming economic data to cut rates.

Fed members also continue to see the benchmark rate falling to 4.6% next year, suggesting three rate cuts in 2024, unchanged from a prior projection of 4.6%.

The economic data, however, seen since the January meeting has shown that inflation remains sticky, with prints for both consumer and producer inflation surprising to the update.

The backdrop of stickier inflation comes against a still-strong economy that many have flagged as potential source of price pressure. The Fed, however, believes economic strength and deflation can co-exist.

“I think, at this point, we want to see strong growth. We want to see a strong labor market. We're not looking for a weaker labor market,” Powell said at the Jan. 31 FOMC press conference.

Powell’s press conference at 14:30 PM ET (18:30 GMT) will likely dominate investor attention for further insight into the Fed’s latest projections including the interest-rate path ahead at time when are betting on at least four cuts next year.

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