Fed FOMC Pauses Interest Rates Yet Again

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The Federal Reserve’s Federal Open Market Committee (FOMC) has once again decided to pause rate hikes and keep the Prime Rate at the same level in what was a highly expected move. The latest Fed meeting provides a respite for Americans as inflation continues to impact consumer confidence and finances. Here is what you need to know about the latest Federal Reserve FOMC meeting:

Federal Reserve Pauses Interest Rate Hikes for Third Straight Meeting

The U.S. Federal Reserve’s Federal Open Market Committee met for the final time in 2023 and did what many experts expected – they kept interest rates at the same level as the previous meeting. That means the Prime Rate currently sits at 8.5%. The move by the FOMC continues the positive trend of steadying interest rates after a prolonged period of rate increases – the sharpest interest rate rise in 40 years.

The latest from the FOMC story follows ten consecutive rate changes over the past two years, with a little more stability in the past six months. After such a lengthy period of increases, most analysts expected another rate hike of .25 base points, so the decision to keep rates at the same rate is a win for many.

Fed Statement Provides Optimism

The FOMC noted, “Recent indicators suggest that economic activity has expanded despite rising inflation. Job gains have been robust recently, and the unemployment rate has remained low. Inflation remains elevated. The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. The Committee judges that the risks to achieving its employment and inflation goals are moving into better balance. The economic outlook is uncertain, and the Committee remains highly attentive to inflation risks.

“In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent. In considering any adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in its previously announced plans. The Committee is strongly committed to returning inflation to its 2 percent objective.”

Despite the lack of rate cuts, don’t rule out more Prime Rate cuts later this year. The Fed meets again at the end of April. Expect a potential quarter of a base point decrease over the coming meeting as the Fed battles flagging consumer confidence.

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Featured image by Dan SmithRdsmith4, CC BY-SA 2.5

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About: Cory Santos
Cory Santos

Cory is the senior credit card editor at BestCards, specializing in everything credit card-related. He’s worked extensively with credit cards and other personal finance topics, including nearly five years at BestCards. Cory’s extensive knowledge is an essential part of the BestCards experience, helping readers to live their best financial lives with up-to-date insights and comprehensive coverage of all facets of the credit card space, including market trends, rewards guides, credit advice, and comprehensive credit card reviews.

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