The last increase in interest rates dates back to July of last year. By doing this, the Fed attempted to reduce inflation. Consumer prices in the world's largest economy are now rising less strongly than a year ago.
Earlier Wednesday, it was found that US consumer prices rose 3.3 percent in May. This means that inflation was lower than expected and also lower than the previous month. The better-than-expected inflation figure reinforces investors' hopes that the Federal Reserve will cut interest rates later this year.
“Advance my appreciation”
The central bank reported that Fed policymakers unanimously agreed to maintain the current rate. They now expect one rate cut this year, and four more next year. This is more than the three previously assumed. “There has been modest progress toward the 2% inflation target in recent months,” the Fed said, saying the economic outlook was uncertain.
Although inflation in the United States is falling, it is still very high, Fed Chairman Jerome Powell said after the two-day interest rate meeting. According to him, the Fed is ready to keep interest rates at a high level “as long as necessary.” Powell said Wednesday's inflation data is a “step in the right direction” but “more good inflation readings” are needed before a rate cut is considered.
European interest
The European Central Bank decided to cut interest rates last week, for the first time since 2019. The central bank decided to do so because inflation in the euro zone had weakened significantly. However, European Central Bank President Christine Lagarde was cautious in interpreting the cut. “There is still a long way to go before inflation is taken out of the economy,” she said.
