The Federal Reserve may start cutting interest rates some time this year.
But not yet.
The Fed left interest rates where they are following the latest FOMC meeting, seemingly indicating they aren’t sure the inflation rate, which has settled in around 3.4% the last couple of months, isn’t necessarily moving toward the Fed’s target rate of 2%.
The central bank’s benchmark rate influences the cost of most consumer and business loans, and companies, investors and individuals have been eager for the central bank to ease the cost of borrowing, according to the Associated Press.
Most Fed watchers – and some economists — think the central bank’s first rate reduction will occur in May or June. Late last year, Wall Street investors had bet that a rate cut in March was a near-certainty. But cautionary comments by a number of Fed officials have dispelled most expectations for a cut that soon, the AP reported.
“The Fed’s probably thinking they’re not really in any rush, there’s no need to really rush into cutting rates,” Subadra Rajappa, head of U.S. rates strategy at Société Générale, a French bank, told the AP. “That’s why the markets started to question the March rate cut.”
