The Fed met Wednesday morning to discuss the direction of the U.S. economy, leaving the federal funds rate unchanged at 5.25%.
The vote was nearly unanimous, supported by a 10-1 vote, but the Fed also noted that inflationary pressures seem likely to diminish in the near future, so a decrease in rates is possible in the coming months.
This is the third month in a row that the Fed has left rates unchanged after nearly two consecutive years of rate hikes. Most had expected this decision, with the proximity of the November elections in mind, and the hope that a declining housing market and slowing economy would cool inflation worries.
The government also reported that core inflation rose 2.9 last month from year-ago levels, much higher than the Fed’s comfort zone of 1-2%.
The news sent stocks lower in late trading as investors grappled with inflation concerns, and hope for lower rates by year-end diminished. But stocks ended the day slightly higher, citing the intent to keep rates at their current levels.
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