Federal Reserve officials said Wednesday that inflation has fallen further toward their target level in recent months. Even so, they signaled that they expect to cut their benchmark interest rate just once this year.
The policymakers’ forecast for one rate cut was down from a previous forecast of three, likely because inflation, despite having cooled in the past two months, remains persistently elevated.
In a statement issued after its two-day meeting, the Fed said the economy is growing at a solid pace while hiring has “remained strong.” The officials also noted that in recent months there has been “modest further progress” toward its 2% inflation target.
That is a more positive assessment than after the Fed’s previous meeting May 1, when the officials had said there had been “a lack of further progress” on inflation.
The policymakers, as expected, kept their key rate unchanged Wednesday at roughly 5.3%. The benchmark rate has remained at that level since July of last year, after the Fed raised it 11 times to try to slow borrowing and spending and cool inflation. Fed rate cuts would, over time, lighten loan costs for consumers, who have faced punishingly high rates for mortgages, auto loans, credit cards and other forms of borrowing.
